As you probably noticed my trades have been very limited the last few weeks. A few of my positions are moving against me and I’m patiently waiting for them to get to the point where I can make a trade without putting them at risk. For example, my U.S. Steel (X) and AK Steel (AKS) shares are lower than where I bought in, so I don’t want to sell Calls. If I sell Calls with a Strike Price where I bought in, I wouldn’t get much of a premium because they are too far Out-of-the-Money. And if I go with a lower Strike Price I’m at risk of losing my stock at a price lower than where I bought. The steel stocks have been moving up this week so I hope to be in business again this week. This can be an interesting week! Both X and AKS announce first quarter’s earnings this Tuesday. AKS before the market opens and X after the close. This will cause some movement. I don’t like to be involved in stock with big news coming out but I’ve been in these stocks and I can’t get out now.
This week I did had 2 trades come to a conclusion. 1 with Micron (MU) and 1 with Yelp (YELP).
You can read my post on the MU trade at Micron Calls Sold. I put in an order to sell 20 contracts but only got executed on 8 of them. With a premium go 35¢ I was going for a total premium of $700 but because I only sold 8 contracts I ended up with a premium of $280. The stock closed below my Strike Price and my Calls expired. I keep the $280. Here’s the orders:
Sell to Open 8 MU 4/21/17 $27.50 C @ 35¢ (+280)
Expired 8 MU 4/21/17 $27.50 C
Profit $280
Not a lot but the way things have been going, I’ll take it and put it in my mattress.
The 2nd trade was with YELP. This trade didn’t work out as will. YELP has been moving down and I was hoping I could get 1 more week of this down trend. It wasn’t to be. As soon as I sold the Naked Calls the stock reversed and started up. And has been moving up ever since. I sold 20 contracts. You can read about it at Sell Yelp Calls. I sold the 20 one week Calls for 35¢ for a premium of $700. When I sold the Calls the stock was at $31.80. I had a Strike Price of $32.50. The stock only moved up and closed on Friday at $33.49, $1 In-the-Money. When you’re in this situation you have a few choices. #1, I could have my broker deliver the stock for the $32.50 and I’d be Short 2000 shares of the stock. #2, I could do a Roll-Out and hope the stock moves in your favor next week. I’ve had much success with this strategy. #3, I could “Buy to Close,” take the lose, and move on.
A little before the close I was contemplating what to do and I decided to go with #3. I was able to get out for 90¢. I decided to pay the 90¢ ($1800), take the lose and move on. I really wanted to free up some margin money for next week. Sometimes I’d rather take a small loss than drag the position on for a small profit. I don’t like to take a loss, especially when it messes with my “2017 Challenge.” I had a few weeks where I didn’t bring in my $3000 and this will be one of them. Not only did I not bring in positive cash but this week I’m taking a loss. O well, shit happens! I’ll try to make up for it in the coming weeks.
On Friday I didn’t get to post my “Buy to Close.” After the market closed I had to run out for an appointment I was late for.
Here’s the “Sell to Open” and the “Buy to Close” for the losing YELP trade:
Sell to Open 20 YELP 4/21/17 $32.50 C @ 35¢ (+$700)
Buy to Close 20 YELP 4/21/17 $32.50 C @ 90¢ (-$1800)
Loss -$1100
Let’s watch the results of the U.S. Steel’s and AK Steel’s 1st quarter this Tuesday. I have a lot riding on the reports.
With the small Micron gain and the YELP loss
Total Weekly loss -820
Email me any questions. Have a great weekend!
Steve
The Options Coach