With U.S. Steel (X) continuing it’s volatility, I decided to buy 5000 shares to cover my 50 contract $40.50 Call. The stock has been up as high as $42 in the last day, and it was a little scary with a $40.50 Naked Call. Today with the stock lower I just bought 5000 shares at $40.30. I have 2 more days till expiration and I hope to get assigned. I would keep the $3250 premium and make 20¢ on the stock sale ($1000). Now that this Call is covered I change the Risk Factor to a 1. Here’s the stock buy order:
Buy 5000 shares X @ $40.30
I still have a $42 Strike Price, 30 contract Naked Call, which expires this Friday. I’ll be watching the next two days. If this works out well it will be another great week. The only way it can go really bad is if X tanks and goes down a few dollars. If that happens I’ll keep the premiums and continue to sell Calls on the 5000 shares. STAY TUNED!
Steve
The Options Coach