Most readers know I’ve owned 2000 shares of Advanced Micro Devices (AMD) for some time now. The stock has been in the $12 area for the last 2 weeks and I’ve been selling Calls. I currently have a $12.50 20 contract Covered Call position and I just sold another 20 contract Call. Since I only own 2000 shares, this Call is a Naked Call. Last Wednesday when I sold the Covered Call I received a premium of 40¢. Today with the stock at $11.70 I received a 32¢ premium. A 32¢ premium on a 11.70 stock is a fantastic 2.7% 5 day return. This Call will expire this Friday!
Sell to Open 20 AMD 3/16/18 $13.00 C @ 32¢ (+640)
This trade is a Naked Call so it gets a Fisk Factor 5. Naked Call are dangerous trades but I’ll be watching closely. Also, I’ll put a “Buy Stop” order to buy the 2000 shares if the stock gets up to $12.90. I don’t want to own another 2000 shares but if it takes a big jump I’ll get my Naked Call covered at $12.90 before it hits my Strike Price.
Steve
The Option Coach