This past week ended exactly as I predicted. I sold Calls on 3 previously owned stocks and was assigned on all 3.
I owned 1000 shares of AppliedMaterials (AMAT), Micron (MU) and Snap (SNAP). I sold a 10 contract Call on each one and was assigned on all the stock. Most Main Street beats Wall Street readers know I like to get assigned. I like to buy the stock, sell a Call, get assigned and move on.
With all the stocks, in previous weeks, I sold Calls without getting assigned. This week I was assigned on all and these deals are over! Below you will see all the orders, the expiration of the Calls, and the selling of the stock.
Applied Materials
7/29/19 – Buy 1000 Shares AMAT @ $50.40
9/13/19 – Assigned 1000 Shares AMAT @ $50.50
Profit +$100
9/4/19 – Sell to Open 10 AMAT 9/13/19 $50.50 C @ 55¢ (+$550)
9/13/19 – Expired 10 AMAT 9/13/19 $50.50 C
Profit +$550
Micron
7/30/19 – Buy 1000 Shares MU @ $47.15
9/13/19 – Assigned 1000 Shares MU @ $48.00
Profit +$850
9/4/19 – Sell to Open 10 MU 9/13/19 $48.00 C @ 75¢ (+$750)
9/13/19 – Expired 10 MU 9/13/19 $48.00 C
Profit +$750
Snap
9/3/19 – Buy 2000 Shares SNAP @ $16.00
9/13/19 – Assigned 2000 Shares SNAP @ $16.00
Profit $0
9/5/19 – Sell to Open 20 SNAP 9/13/19 $16.00 C @ 45¢ (+$900)
9/13/19 – Expired 20 SNAP 9/13/19 $16.00 C
Profit +$900
Please notice with SNAP I bought the stock at $16 and sold a $16 Call. I was assigned at the same price I bought the stock so there was no profit on the stock sale. When I bought the stock at $16 and sold the $16 Strike Price I knew I was in this deal for the premium only. It was a great premium of 45¢ on the 2000 shares at $16. A 45¢ premium on a $16 stock is a return of 2.8%.
When selling Covered Calls you always have a chance for an Opportunity Lost. Please read my page. With AMAT my Strike price was $50.50 which is where I was assigned. I made $100 on the stock because I bought at $50.40. On Friday at the close the stock was at $51.35. I had an Opportunity Lost of 85¢, or $850. If I never sold the Call I would have realized that gain if I sold the stock. But I did sell the Call and brought in a $550 premium so the Opportunity Lost was not too bad. And I probably would not have sold the stock!
With MU I bought the stock at $47.15 and sold the $48 Call. I was assigned at $48 for a $850 gain on the stock. However, the stock closed at $50.50. That gave me a $2.50 Opportunity Lost. That’s $2500 I did not make because I sold the Call. That’s a substantial amount! But I did bring in a $750 premium so the actually Opportunity Lost was $1750.
Opportunity Lost is something I don’t worry about. I made money, I’m happy! If I made money, I didn’t lose money. If you cannot handle the Opportunity Lost you must buy and hold and don’t sell Call. When selling Covered Call this is what you sign up for.
With 3 Covered Calls I had a great week.
Total Weekly Gain +$3150
I had 2 great weeks in a row. Let’s see what I can do this week.
If you have any questions on Opportunity Lost send me an email.
Steve
The Options Coach