I have a Covered Call with Advance Micro Devices (AMD) that expires this Friday. As I write the stock is at $13.80 and that Covered Call has a Strike Price of $15. I feel like I’m not gonna get assigned this Friday which would mean I’ll keep the premium of the Call and I’d still own the 2000 shares. Since I feel I’ll still own the stock next week I just sold a Call to expire the 28th. The only problem is AMD’s earnings come out on the 25th. I didn’t want to be involved in a position going into earnings but in my opinion I’ll own 2000 shares. With that said, I decided to sell a Call which will be a little insurance if the stock goes down after earnings. I hope this makes sense. If not please send me an email.
If I get assigned this Friday, today’s trade will be a Risk Factor 5, because I won’t own the 2000 shares and I’ll have a Naked Call going into earnings. If I don’t get assigned the Call that is part of my existing Covered Call will expire and the Call I sold today will be part of a new Covered Call, so today’s trade will change to a Risk Factor 1.
Sell to Open 20 AMD 7/28/17 $15 C @ 45¢ (+$900)
Steve
The Options Coach
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