Today with the market down I jumped out of my Netflix (NFLX) Call.
I’ve been holding 100 shares of NFLX for almost 2 years. And I’m up close to 100% on the stock gain. This week I decided to bring in a premium with the selling of a 1 contract Call. The stock was at $372 and I sold a $380 Call to expire 4/26/19. The next day the volatile NFLX went up to $383, blowing through my $380 Strike Price. I didn’t want to get assigned on my stock so I made an “Adjustment Trade.” I did a Roll Up & Out. I bought my way out of my Call and sold another Call with the Strike Price of $385 and the Expiration Date of 5/3/19.
Today the market is down and so is NFLX. The stock came down to the point where I could do a “Buy to Close” and make a profit. I closed the position for a $200 profit. Take a look at the trades involved to open the position, Roll the position, and close the position:
4/22/19 – Sell to Open 1 NFLX 4/26/19 $380.00 C @ $2.50 (+$250)
4/23/19 – Buy to Close 1 NFLX 4/26/19 $380.00 C @ $6.50 (-$650)
4/23/19 – Sell to Open 1 NFLX 5/3/19 $385.00 C @ $7.50 (+$750)
4/25/19 – Buy to Close 1 NFLX 5/3/19 $385.00 C @ $1.50 (-$150)
Profit +$200
Now that I closed the position I don’t have the obligation to deliver my stock next Friday. If NFLX continues on it’s upward direction I’ll get the gain on the stock, while putting the $200 premium profit in my mattress.
If the stock rebounds between today and tomorrow I’ll be able to sell another Call to expire next Friday. Let’s watch and see what NFLX does.
When I sell a Call I determined whether I want to get assigned or not. The Strike Price and Expiration Date I choose is based on this decision. I have a different strategy to get assigned or to try an keep my stock. The “Adjustment Trade” I made above was made because I want to keep my NFLX stock while bringing in a premium.
If you have any questions on the original Call sold and the “Adjustment Trade” I made, please send me an email.
Steve
The Options Coach