U.S. Steel (X) has been moving down the last week which had and has me concerned. I’m in my 10,000 shares at $35.73. The stock has been down below $32 in the last day. Good reason for concern! I was starting to think I wasn’t going to get a Call sold this week because the stock was down and I couldn’t get a premium that was worth the trouble without risking a Strike Price below my purchase price. If you don’t understand my concerns I mentioned in this sentence please send my an email.
Today the steel stocks are on a big run after Commerce Secretary nominee Wilbur Ross’ comments on possible tariff requirements on steel imports to prevent dumping in the USA. With this run I was able to sell a Call on my X shares that I am comfortable with. I sold 100 contracts of the X 1/20/17 $35.50 Calls for a premium of 25¢ ($2500). My only concern in my Strike Price. I bought the stock for $35.73 and my Strike Price is $35.50. If X get above $35.50 by this Friday, I’ll get assigned and I would lose 23¢ on the stock sale. I’m hoping the stock continues up but stays below $35.50. If I do get assigned I would lose 23¢ on the stock but I’m bringing in a premium of 25¢ so I wouldn’t lose money, I would actually make 2¢ plus the premiums I brought in with past trades. I give this Covered Call trade a Risk Factor of 1. I’m happy with my position! Let’s take a look at the order:
Sell to Open 100 X 1/20/17 $35.50 C @ 25¢ (+$2500)
I’m still trying to sell a Call on the 3000 shares of Micron I own. Micron is down about 35¢ from where I purchased the stock.
Steve
The Options Coach