With the NASDAQ trying to fight back today, and Micron (MU) down, I just bought a 10 contract Call.
I’m already in and out of a Call with Nvidia (NVDA) today. Micron, which is a very strong stock, is trying to fight it’s way back to even on the day. It’s already up $1 from it’s low on the day. With the stock at $46.70 I sold a 10 contract Call which will not expire until 1/17/20. No way do I plan on holding on that long. In fact I hope to be out by the end of the day, or tomorrow, with a 50¢ profit. When it comes to buying options you will realize I like to go out on the Expiration Date. In the case I have to hold on to the position for a while I’ll be less exposed to Time Decay. If I go with a shorter time frame the Time Decay will start to eat away at my option immediately. The longer term option gives me some protection.
Buy to Open 10 MU 1/17/20 $47.00 C @ $5.60 ($5600)
This is a long option but it’s a hot stock, and I went out 6 months on the Expiration Date, so I give it a Risk Factor 3.
Steve
The Options Coach