I was just filled on 2 trades. With the NASDAQ down this morning, and the DOW up, I noticed an opportunity to make a few dollars with Nvidia (NVDA) and Applied Materials (AMAT). With NVDA I bought an option and AMAT I did a “Buy-Write.”
Let’s take at the 2 trades. I’ll start with NVDA.
The stock was down a few dollars this morning and I feel it will be coming back up very soon. Maybe even today! With the stock at $173.15 it looked like the stock was hitting support on the “T-Line.” The “T-Line” is the 8 Day Moving Average. This was looking at the candlestick chart with the daily candlesticks. On July 2nd the 8 Day Moving Average moved above the 50 Day Moving and on July 22nd it moved above the 200 Day Moving Average. I feel this stock is poised to go higher. I bought 10 contracts of the $175 Call to expire in January.
Buy to Open 10 NVDA 1/17/20 $175.00 C @ $17.25 ($17,250)
This Call will not expire until January but I will only be in this trade a few days, maybe less. As I write the stock is already up to $174. Buying options is a dangerous game so I always go out a bit with the Expiration Date for protection against Time Decay. I would love to make $1 on this trade but I’ll be happy with 50¢. Since this is the purchase of an option is a bit dangerous but I did go out to January, so I give this trade a Risk Factor 3.
I know I don’t report the buying of many options so if you have a question write me an email.
Next, I did a “Buy-Write” with AMAT. AMAT is a greats stock! With the NASDAQ down, it looked like the stock is hitting support on the “T-Line.” The “T-Line” is the 8 Day Moving Average. This was looking at the candlestick chart with the daily candlesticks. I also noticed the 50 Day Moving Average is well above the 200 Day Moving Average and the 8 Day Moving Average is well above the 50 Day Moving Average. I feel this stock is also poised to go higher. I could have just bought the stock or an option but they are reporting earnings on Aug 15th. I wanted to do a deal that would be over before that. My “Buy-Write” will expire this Friday, Aug 2nd. I bought 1000 shares of the stock at $50.40 and sold the $51 Call to expire this Friday.
Buy 1000 Shares AMD @ $50.40
Sell to Open 10 AMAT 8/2/19 $51.00 C @ 60¢ (+$600)
This “Buy-Write” is a Covered Call. This is a very safe trade so it gets a Risk Factor 1.
I bought the stock at $50.40 and received a 60¢ for $600. This is a 1.2% Rate of Return is less than a week. This trade fits into my “1 Week/1%” strategy. If this “Buy-Write” works the way I think it will I’ll keep this $600 premium and make 60¢ on the stock assignment for another $600. This would be a great 1 week trade for $1200.
Steve
The Options Coach