In my last post I mentioned that I put in an order to sell 15 contracts of the RH 3/31/17 $39 Calls for a premium of 90¢ (+$1350). I was just executed on that order. This option is still $1.50 Out-of-the-Money so I’ll leave it Naked until the stock goes a bit higher. I would like to stay Naked and have it expire on Friday below my Strike Price. It is a Naked Call but it’s a comfortable distance from my Strike so I’ll give this trade a Risk Factor 4. Here’s the order:
Sell to Open 15 RH 3/31/17 $39 C @ 90¢ (+$1350)
I mentioned in my last post that I was executed on a buy order while away from my computer. Before the opening I placed the order because I was going to be away from my computer for a few hours. I had a Naked Call on RH and I didn’t want it to go above my Strike Price while I wasn’t watching. My Strike is $37.50 so I put in an order to buy 1000 shares at $37.40. I put on a limit order. What I forgot to do is put on a “Stop Limit” order. I was in a rush and I made a mistake. The way I put in the order it would be executed at any price at or below my order price. A “Stop Limit” order would buy the stock before it went above my order price and it wouldn’t execute until it got to that price. You really have to be careful and try not to make these mistakes. However, the way it worked out was better for me. The stock went all the way up to $37.81 and I would have been executed at the higher price of $37.40 but because I didn’t put a “Stop Limit” order it got executed at the much lower price. It got executed right at the open. Anyway, this mistake helped me! If you have any questions on the difference between a “Limit” order and a “Stop Limit”order send me an email.
Steve
The Options Coach