Hi Readers! Right now it’s Wednesday 7:00pm and I just walked into my house returning from Isla Mujeres/Cancun, Mexico. I had a week of great weather and a lot of relaxation. I guess it’s time to get back to work.
This morning, before I left my hotel room I placed an order to sell a 5 contract Call against my 500 shares of Square (SQ). I just now opened my computer and I saw I was filled on that order. I sold 5 contracts of the $56.50 Calls expiring this Friday. The stock closed at $56.59 and in the after hours it’s up to $56.85.
At this point there’s 2 days till expiration. I kind of feel like I wish I didn’t place this order. There has been unusual option activity on SQ and it could move higher by Friday. I’ll watch the stock closely in the morning. If it looks like it might continue higher I might buy another 500 shares for the capital gains on the stock. This trade is a Covered Call on previously owned stock so it gets a Risk Factor 1.
Sell to Open 5 SQ 5/11/18 $56.50 C @ 50¢ (+$250)
Now that I got my vacation in, 1 week from today I go in for shoulder surgery. My typing is slow now, who knows what it will be like next week? I’ll do my best!
Steve
The Options Coach
Why sell an in the money CC if you think it is going to continue to go up? Out of the money CC @ 57 will make you a tidy profit.
Hi Robert, I did not sell an “In the Money” Call. Yesterday morning I placed the trade in Mexico before I ran for my plane, about 10:15am NY time. I placed the trade with a Strike Price of $56.50 when the stock was at $55.30. I don’t know the price of the stock when I got filled because I was on my way to the airport, but I would guess it was about $55.70. Remember, I’m in the stock at $54.70. If assigned I’ll keep the premium, plus make $1.80 on the stock for an additional $900.
I received a .50 premium for $250. If I went out to a $57 Strike the premium would have been about .25. I’m in this game for the premium and the .50 premium really didn’t thrill me. I would not have placed the trade for .25.
If assigned, I’m very happy with a $1150 gain for a 3 day trade. I did own the stock longer but I’ve brought in a few premiums on this 500 shares since I purchased on March 13th.
Steve