Hi All, it feels good to slowly get back into my research, my trading and catching up with Main Street beats Wall Street. This is my 1st week ending report in a long time. Let’s see what happened this week.
I started the week off with my 1st trade on Monday. I sold a 10 contract Naked Call on Weights Watchers (WTW). This trade was a little dangerous because I sold the $22 Naked Call when the stock was at $22.25. I did this because, looking at the candlestick chart, it looked to me like the stock was gonna come down. And it did! I received an 85¢ premium for $850 on 10 contracts. After holding for an hour the stock came down to where the premium was 55¢ ($550). You must understand Short Positions to understand how you make money with this situation. With a Short Position you sell something before you buy it. In this case I sold an option for $850 and bought back the position for $550 for a $300 profit. I love Naked Calls! and I love when they work to make money in a very short time. In this case 1 hour. Naked Calls can be very risky, so if I see an opportunity to get out with a profit, I do! Below are the trades I made to get in and out of the position.
Weight Watchers Naked Call
3/4/19 – Sell to Open 10 WTW 3/8/19 $22.00 C @ 85¢ (+$850)
3/4/19 – Buy to Close 10 WTW 3/8/19 $22.00 C @ 55¢ (-$300)
Profit +$300
The next trade was made on Tuesday the 5th. This was also made on Weight Watchers (WTW) as a Buy-Write. I bought 1000 shares at $22, and sold the $22 Call for a 60¢ premium ($600). A Buy-Write is a Covered Call, but both buying the shares and selling the Call are done with 1 trade. I sold the Call At-the-Money with the hopes of getting assigned on the stock and having the option expire. The At-the-Money Call I entered for the premium only. I’m not looking to make money on the stock. I bought the stock only to cover my Call for protection in the case the stock takes off and goes much higher. If that happened and I got assigned, I have the stock to deliver.
In this situation the stock did not go up, it went down. So I was not assigned and I still own the stock. The option expired so I keep the $600 premium. Below is the option trade and the expiration trade. I didn’t post the trade buying the stock because I still own it. I’ll post it when I get out of that stock position. Hopefully with a profit!
3/5/19 – Sell to Open 10 WTW 3/8/19 $22.00 C @ 60¢
3/8/19 – Expired 10 WTW 3/8/19 $22.00 C
Profit +$600
On this trade I received a question from a reader, Greg.
Hey coach….on this WTW trade…what happens if the stock tanks down to 21 or 20 at expiry …???
I’m a little upset because I think Greg jinxed me lol. The stock did go down and I still own it because I wasn’t assigned. I’m only joking with Greg! When trading Covered Call, which is a very low risk trade. Probably the lowest risk trade when it comes to options. There’s always a shot the stock will go down substantially. In this case I bought for $22, and as I write, the stock is at $19.83. You should do Covered Call on stocks that you like just in case it does fluctuate down a bit. I really don’t like WTW but I do think the stock will get a little bounce. Oprah is the largest share holder and she took a big hit since June. A hit to the tune of $550 million! I don’t think a person like Oprah is gonna take a half a billion dollar hit without doing something. For my sake, and hers, I hope she does something fast. If not I’ll have to bail out, and hopefully make some premiums before I do so. Just this week I brought in $900 in premiums.
Also on Tuesday I sold 100 shares of RH (RH). I mentioned in a post I’m looking to dump some stocks I’ve been holding and not trading with while coaching basketball. I want to dump some of my holding to give me more capital to trade with. I bought some of these stocks to be invested while not trading. Right now I don’t like RH. I jumped out with the stock at $154 and it’s been going down since I got out. Today it’s down to $140.50. Even though I only had 100 shares, I’m glad I got out to free up some money. I still have more freeing up to do but it’s a start.
I got in this stock back on September 5th at $138.86. I know it’s only 100 shares but for a small amount of stock I made a nice profit. Here’s the trades.
RH
9/5/18 – Buy 100 Shares RH @ $138.86
3/5/19 – Sold 100 Shares RH @ $154.00
Profit +$1514
Total Weekly Gain +$2414
I hope everyone had a great weekend. It feels good to be back! Let’s watch to see what happens with my 1000 Weight Watchers shares I’m holding. Come-on Oprah! I’m looking for you in a few big commercials!
Steve
The Options Coach