Good morning “Main Street beats Wall Street” readers. Yesterday wasn’t the best day for the market or my holdings, U.S. Steel (X)l and Micron (MU). The market is a little different this morning, more specifically for X & MU. As I write X is up $1.85 and MU up $1. In my last post I wrote that I was trying to reduce the size of my X holding. I would like to reduce from 10,000 shares to 5000 shares. And make money while I do it! I wrote I was going to try to sell 2 Calls on my shares, (2) 50 contracts Calls. 1 I would like to get assigned on 1 and the other I would like for it to expire and keep the 5000 shares involved. Well this morning I was able to start that process. With U.S. Steel up I was able to get executed on 2 Calls and receiving nice premiums while I did it. Remember I am in my 10,000 shares of U.S. Steel shares at $35.73 as listed in my Active Trades. 1 of the 50 contract Call I just sold has a Strike Price of $36 and the second 50 contract Call, $36.50. Both of these trades I give a Rick Factor of 1 because they are Covered Calls sold against previously owned shares. Below are the 2 trade order forms.
Sell to Open 50 X 1/27/17 $36 C @ 35¢ (+$1750)
This Call I hope to get assigned on, meaning I want the stock to close this Friday above $35. My next Call I raised the Strike Price a little to $36.50. This Call I hope I do not get assigned on. This Friday I hope the price of X is below $36.50. If X keeps running and I get assigned on both Calls, no problem! I’ll keep the premiums and make nice money on the stocks. Here’s the second Call I just sold.
Sell to Open 50 X 1/27/17 $36.50 C @ 25¢ (+$1250)
Let’s watch and see how these 2 Calls play out. The reason I want to get assigned on half my position is I don’t want to hold 10,000 shares of of U.S. Steel. It’s a little too volatile for me. I think 5000 shares would be a nice position to hold to make some money on the hot stock and get nice 1 week premiums to keep the money flowing into my mattress.
As I’m writing I have an order in to sell a 30 contract Call on my 3000 shares of Micron. I’ll let you know if I get executed on that order.
I would like to welcome our new readers. We got a bunch more this week. If you have any questions on what I’m doing please send me an email. And be very careful! This game can be very profitable but it’s also very easy to lose a lot of money fast. “Slow and steady, steady and slow” the tortoise wins the race.
Steve
The Options Coach