Yesterday I sold 100 contracts of the U.S. Steel (X) 12/30/16 $36.50 Calls for a premium of $.70 ($7000). Today with the market down on “not so great” housing news, I decided to get out of my X Calls. With 2 full days remaining until expiration and the premium down to $.15 I locked in a nice 1 day profit of $5500. If the stock goes up at the open tomorrow I’ll sell another Call. Below is the “Sell to Open” and the “Buy to Close” orders.
Sell to Open 100 X 12/30/16 $36.50 C @ $.70 (+$7000)
Buy to Close 100 X 12/30/16 $36.50 C @ $.15 (-$1500)
Profit +$5500
I still own the 10,000 shares of X. I’m hoping the market rebounds tomorrow and I get to sell another Call. If not I hold the stock and sell a Call when I can.
Selling Calls is a way of hedging (insurance) in the case your stock goes down when trading Covered Calls. I only had $.15 left of insurance so I think this was a good exit point.
Steve
The Options Coach