I’m writing this week’s report a little late this week. Now that I’m back coaching basketball, I had playoffs all weekend. It’s now Monday and I’m getting it done.
All my trades involved U.S. Steel (X). I started the week with the same as the last 6 weeks. I have 10,000 shares of X that I carried over from 2016. Early in the week I sold (2) 50 contract Calls. 1 was a $36 Call and the other was a $37 Call. On Tuesday the stock took a dip. My $36 Call, which I brought in a premium of $2000 was selling for $500, up $1500. And my $37 Call was selling for $250, up $750. I made the decision to “Buy to Close” both of these Calls to lock in the profit with the hopes the very volatile stock would return back up so I could sell another Call before the week was out. Here are the 2 Calls “Sell to Open” and “Buy to Close” orders.
Sell to Open 50 X 2/10/17 $36 C @ 40¢ (+$2000)
Buy to Close 50 X 2/10/17 $36 C @ 10¢ (-$500)
Profit +$1500
Sell to Open 50 X 2/10/17/ $37 C @ 20¢ (+$1000)
Buy to Close 50 X 2/10/17 $37 C @ 5¢ (-$250)
Profit +$750
By Tuesday afternoon I had $2250 lock in my mattress. On Thursday with the stock taking a little dip I was able to sell another Call. This time I sold (1) 100 Call. I sold a $36 Call with the stock in the $35 area. This was a 2 day Call and I got a premium of 25¢, which on the 100 contracts is a total premium of $2500. After I sold the Call the stock went wild and on Friday I was assigned on my 10,000 shares. Here’s the orders.
Sell to Open 100 X 2/10/17 $36 C @ 25¢ (+$2500)
Expired – 100 X 2/10/17 $36 C
Profit +$2500
While I had the Short Call in place the stock went up big and closed at @37.60. This left me with a large Opportunity Lost. Most of the readers know how I feel about an Opportunity Lost. For you new readers, I don’t care about it! If I made money I’m happy. I take my profit and move on. I’m in the business of collecting premiums and in the case of Covered Calls, I enjoy making a little on the stock. The bottom line is it’s very hard to consistently make money in this game with a disciplined game plan. I cannot second guess if I should have sold a Call or not because that my game plan to make money. Please read my page on Opportunity Lost.
I bought these 10,000 shares on 12/22/16 for $35.73. I was assigned on all the shares at $36. I made another 27¢ on the sale of the stock. That’s $2700 on the 10,000 shares. I know if I never sold the Call I would have made a lot more on the stock but this week alone I brought in $4750 in premiums alone plus the $2700 on the stock sale. A total of $7450, I’m Happy! Here’s the stock buy and sell orders:
12/22/16 – Buy 10,000 shares X @ $35.73
2/10/17 – Assigned 10,000 shares X @ $36
Profit +$2700
Total Weekly Gain +$7450
It is a little before the Monday opening and U.S. Steel is up big. I have a 50 contract $39.50 Call sold so I’ll have to watch it closely because it’s a Naked Call. The way the stock’s moving I will probably have to cover this Call.
Market’s almost ready to open!
Steve
The Options Coach