Most readers know I’ve been holding 1000 shares of Micron (MU) for a while now. Since 11/21/17 to be exact. I bought in at $48.40. Today the stock is up and hit $45.20. Since I’ve owned the stock I’ve sold a few Calls bringing in some premiums. The premiums are not great but I was in the stock for the stock gain. I really thought it was heading to $60. It’s a great stock with very nice fundamentals and a high rating but it’s been very sluggish lately. There’s a lot of analysts who are surprised with it’s lack of movement, as I am. Today when the stock was at $45 I entered a “Sell to Open” order to sell 10 contracts of the $46 Calls expiring this Friday with a premium of 45¢. When the stock hit $45.10 I was filled.
Sell to Open 10 MU 2/23/18 $46.00 C @ 45¢ (+$450)
This is a Covered Call sold on previously owned stock but it gets a Risk Factor 2. I give it a 2 because my Strike price is $46 and I got in the stock at $48.40. If the stock gets to $46 and I get assigned I’ll take a loss on the stock sale. To tell you the truth, I really don’t care if I get assigned with the loss. I’ve been holding the stock for a while and I’d really like to put the money to work somewhere else. The stock has been moving the last week so I think there is a shot for the stock to hit $46. With the way my account has been moving, if it does, I’m OK. I’d take a $3000 loss but I’ve taken in about that much in premiums since I’ve started with MU. I’ll be OK moving on.
I received a 45¢ premium on a $45 stock so this trade fits into my “1 Week/1%” strategy. Most readers know I love to take in a 1% premium for a 1 week trade. If you did that every week you’d have a great year. It won’t be a true 1 week/1% for me because I’m in the stock at $48.40. If someone did this Covered Call starting today with a “Buy-Write” it would be a true 1 week/1% trade. I think it would be a nice trade.
Steve
The Options Coach