I like the way this week’s Calls are going so I decided to get a jump on my next week’s “2017 Challenge” goal aspiration.
I have 2 Calls sold on U.S. Steel (X) to expire in 2 days, Friday the 17th. As I write the stock is at $40.20. My 2 Calls are a 50 contract $39.50 Covered Call and a 30 contract $41.50 Naked Call. I am well aware that we have 2 long days left to expiration on a very volatile stock but I like the way I’m looking.
I love 1 week Calls, but if I can get get started on next week’s goal with 10 days to expiration, I can get a very nice premium. Remember Time Value is a major part of the value of the option’s premium. A 10 day option’s premium will be much higher than a 5 day option’s premium. So if I have plenty of margin buying power I might as well take advantage of it.
A few moments ago I sold 30 contracts of X 2/24/17 $41.50 Naked Calls and I received a premium of 80¢ for a total of $2400. That’s a 2% Rate of Return in 10 days. This trade can be a little dangerous because it’s Naked but it is over $1 Out-of-the-Money, so if watched closely I think I’ll be OK. And I will be watching! It is $1 Out-of-the-Money but it is a very volatile stock, so I give this trade a Risk Factor 4. Here’s the sell order:
Sell to Open 30 X 2/24/17 $41.50 C @ 80¢ (+$2400)
If U.S. Steel gets to $41 in the next few trading days I will seriously consider covering this Call with buying 3000 shares.
If you didn’t take a look at my “2017 Challenge” please do so. It’s very interesting!
Steve
The Options Coach