This is turning out to be a pretty busy morning. I already made a trade involving Micron options. While I was writing, reporting that trade to you, I also had a trade order in for U.S. Steel (X). And, while I was writing on Micron the U.S. Steel trade was executed. I previously owned 10,000 shares of U.S. Steel. Against those shares I sold 100 contracts of the X 1/13/17 $36.50 Calls and brought in a premium of 60¢ for a total of $6000. While I was writing, X went up to the point my trade was executed and while I was still writing the stock came back down to the point where the 60¢ premium was down to 30¢. Since I was only in the trade for about 3 or 4 minutes I decided to “Buy to Close” that trade. I was executed and I made a quick $3000. As I write this post X is still down but I would love to see it come back up so I can sell the same Call for another 60¢ to bring in another $6000. The bottom line is I am in & out of my U.S. Steel trade and I put $3000 in my mattress. Now I would like to sell another Call. Here’s the trade orders getting in & out of the X trade:
Sell to Open 100 X 1/13/17 $36.50 C @ 60¢ (+$6000)
A few minutes later
Buy to Close 100 X 1/13/17 $36.50 C @ 30¢ (-$3000)
Profit +$3000
I have an unwritten rule, if I’m able to get out of a position making half the premium I signed up for, after being in that trade a very short time, I do. Here it is not even noon on a Monday and I was able to lock in a $3000 profit on a few minute trade. This falls into my exit strategy! If you have any questions on this please send me an email.
Steve
The Options Coach