Yesterday the steel companies received an upgrade. They are pretty low so I just did a “Buy-Write” with U S Steel (X). I bought 2000 shares for $21 and I sold 20 contracts of the X 6/23/17 $21 Calls. I received a premium of 55¢ for $1100 on the 20 contracts. I sold the Call At-the-Money so If the stock is above my Strike Price on Friday I’ll get assigned with no profit on the stock. I’m in this deal for the premium only! I’m hoping in the next few days the stock goes up a little and I get assigned. I’ll be very happy with the $1100 premium. If it works the way I want, I will not make money on the stock. I bought at $21 and I’ll sell at $21. However, the premium alone gives me a Rate of Return of 2.6% in 4 days. This is a Covered Call with a stock that is low, so I give this trade a Risk Factor 1. Here’s the orders”
U S Steel “Buy-Write”
Buy 2000 Shares X @ $21.00
Sell to Open 20 X 6/23/17 $21 C @ 55¢ (+$1100)
Let’s see how it works out. This can be a very nice 4 day deal. It’s all in the Rate of Return! We must re-program our brains to look at our Rate of Return as weekly or monthly returns, and NOT annual returns. Our potential is much greater than that.
Steve
The Options Coach