Today is MLK day. The end of a 3 day weekend. I had an extremely busy weekend and I am just sitting down now to write my week ending report which ended on Friday. I had a very nice week! I didn’t have many trades which is part of my strategy for the new year. I’ll be writing about it when I release my “2017 Challenge” strategy, hopefully soon. All my trades involved 2 stocks, U.S. Steel and Micron. Let’s take a look at what I did.
U.S. Steel
As the Main Street beats Walls Street readers know I own 10,000 shares of U.S. Steel (X). I carried the shares over from 2016. To start the year off I sold a Call against these shares last week. The stock did not hit my Strike Price and the Call expired. To start this week I still owned the shares so I sold another Call. I sold the Call near the opening of the market on Monday morning. I sold 100 contracts of the 1/13/17 $36.50 Calls which gave me a premium of 60¢ for a total of $6000. I was hoping to hold the Call for the week, have the stock go above my Strike Price, get assigned, make some money on the stock and keep the $6000 premium. I want to get out of my shares or at least reduce the size of my holding. Well, as soon as I sold the Call the stock went down and in about 10 minutes the 60¢ premium was down to 30¢. You must understand that when you sell a Call you are in a Short position. With a short position, when the stock goes down your position become more valuable. When the Call was worth 30¢ I decided to close the position with a quick profit, so I bought the Call to close the position. I sold for 60¢ ($6000) and I bought for 30¢ ($3000). I made $3000 in 10 minutes. We have a few new readers. Make sure you completely understand how a short position works. Here’s the in and out order forms:
Sell to Open 100 X 1/13/17 $36.50 C @ 60¢ (+$6000)
Buy to Close 100 X 1/13/17 $36.50 C @ 30¢ (-$3000)
Profit +$3000
Since I was in and out of this position so fast with the dropping of X. I was hoping the stock would go back up and I could sell another Call. The next day on Tuesday the stock came back up. This time I sold (2) 50 contracts Calls instead of (1) 100 contract Call. I sold a $36 Call (40¢ for $2000) and a $36.50 Call (35¢ for $1750). I was hoping the stock would get above $36 and I would get assigned on 5000 shares to reduce my position. And I really didn’t care what happened to the $36.50 Call. If I got assigned, fine. If not I would keep the 5000 shares and sell another Call this coming week. The stock didn’t get above $36 and both Call expired. I keep the 2 premiums of $2000 and $1750, plus I keep the 10,000 shares of X. Here’s the 2 Calls that expired:
Sell to Open 50 X 1/13/17 $36 C @ 40¢ (+$2000)
Expired 50 X 1/13/17 $36 C
Profit +$2000
Sell to Open 50 X 1/13/17 $36.50 C @ 35¢ (+$1750)
Expired 50 X 1/13/17 $36.50 C
Profit +$1750
Micron
On 1/4/17 I bought 3000 shares of Micron (MU). Last week I sold a Call which expired and this week I stilled owned the stock. On Monday, right after I did that first U.S. Steel trade I sold another Call on MU. I sold 30 contracts of the 1/13/17 $22.50 Calls and brought in a 35¢ premium for $1050. The stock didn’t go above the Strike Price of $22.50. I keep the premium of $1050 and I keep the 3000 shares of stock. Here’s the order:
Sell to Open 30 MU 1/13/17 $22.50 C @ 35¢ (+$1050)
Expired 30 MU 1/13/17 $22.50 C
Profit +$1050
On Monday my 10,000 shares of U.S. Steel will open at $32.70 and my 3000 shares of Micron at $22.18. I’m not worried about Micron but I’m a little concerned with holding 10,000 shares U.S. Steel. I hope they both go up so I can get Calls sold on them.
Total Weekly Gain +$7800
I hope everyone enjoyed the 3 day weekend. Back to work in the morning.
Any questions, send me an email.
Steve
The Options Coach