On Monday I bought 1000 shares of Advanced Micro Devices (AMD) at $24.90 and sold a $26 Call. I received a 60¢ premium for $600. This morning AMD is down and the premium went down to 10¢. With 3 days still left until expiration, I decided to get out of the position. I’m hoping the stock will bounce back in the next day or 2 and now I’m not obligated to deliver the stock. I received a $600 premium on the sale and I bought out for $100. I figured it was worth giving back the $100, while taking a $500 locked-in profit, with a chance of this hot stock to bounce back. Even if it doesn’t I still put $500 in my mattress 3 days early.
8/27/18 – Sell to Open 10 AMD 8/31/18 $26.00 C @ 60¢ (+$600)
8/29/18 – Buy to Close 10 AMD 8/31/18 $26 C @ 10¢ (-$100)
Profit +$500
Steve
The Options Coach