I already have a 10 contract Covered Call on Weight Watchers (WTW). Two day ago, with the stock running, I bought another 1000 shares to get some stock gain. I bought the second 1000 shares at $44.50. Today I sold a 10 contract Call on these shares. The stock is up $1.25 and it at $47.50, up $3 from where I bought. I’m thinking I have a nice gain and maybe the stock will slow down a little so I sold a Call on these shares. With the stock moving crazy I went out to a $49 Strike Price to try and capture a little more on the stock. I sold 10 contracts of the WTW 8/18/17 $49 Calls for a premium of 60¢, for $600. This is a Call sold on previously owned stock so it gets Risk Factor 1. Plus, at this point, I’m up $3000 on the stock already which makes this trade less risky.
Sell to Open 10 WTW 8/18/17 $49.00 C @ 60¢ (+$600)
Getting 60¢ on a $47.50 stock gives me a return of 1.2% for a 1 week trade. Thats in premium only. I also have the stock gain.
Steve
The Options Coach