Most readers know I’ve been away for over a week. I visited a friend in Dallas, an FDNY friend who also played on the NYC Fire Dept Basketball team. While in Texas I also went to Austin. This is the first time I’m in my office in over a week so I have a lot of work to do. Not only with Main Street beats Wall Street, but with Fiore’s Pizza and my home bills.
I’ll start with a trade I just made, then I’ll get to my Weekly Report for last week.
I just did a “Triple Play Hedge” with Weight Watchers (WTW). I haven’t done one in a while so I’ll give a short explanation. But please go to the page “Triple Play Hedge” and read it. It’s a strategy I came up with, and when I see a good opportunity I like to do it. I buy a stock and sell 3 Call. The 3 Call gives me the insurance I like in the case the stock goes down. The buying of the stock and the 1st Call gives me a Covered Call, and the other 2 Calls gives me extra insurance, which I get paid for. If the stock goes down I have 3 Short Calls that increase in value to counter the stock going down. If you are a Grasshopper you must read the page on “Triple Play Hedge.”
Below you will see the orders for the buying of the stock and the 3 Calls I sold. I sell 1 Call per week for 3 weeks.
Buy 1000 Shares WTW @ $25.93
As you see, I bought the stock for $25.93. The 1st Call I pretty much sold at the money which is safe because that’s a Covered Call. It’s a Call with the Strike Price of $26. This Call expires this Friday. The next Call is a $27 Call and expires next Friday, June 9th. The last Call is a $28 Call and it expires June 16th.
Sell to Open 10 WTW 6/2/17 $26 C @ 55¢ (+$550)
Sell to Open 10 WTW 6/9/17 $27 C @ 60¢ (+$600)
Sell to Open 10 WTW 6/16/17 $28 C @ 50¢ (+$500)
The 1st Call is a Covered Call so it gets a Rick Factor 1, but the entire “Triple Play Hedge” includes 2 Naked Calls so the entire trade gets a Risk Factor 3.
If you have any questions on my “Triple Play Hedge” please send me an email. It’s important to know how it works. I received insurance and I get paid for it. You only have insurance up to the amount of premiums you bring in. This “Triple Play Hedge” brought me in 3 premiums. $550, $600 and $500 which add up to $1650 in total premiums. If all goes well, this trade will be complete on Friday June 16th. It will be a 6.3% Rate of Return in 17 days. Let’s watch to see how it works out.
Steve
The Options Coach