I was filled on selling a Call to expire today, and another Call for next Friday.
I bought 1000 shares of Square (SQ) on 10/1/19 for $62.75. With these shares I sold numerous 10 contract Calls. The Calls expire on 10/4, 10/11 and 10/18. I was not assigned on any of these Calls so I just kept selling and I brought in a total of $2400 in premiums.
This week SQ took a little dip and I wasn’t able to get a Call sold to expire today. Well, that just changed! Sq is up today and with the stock at $62.50 I sold a 10 contract Call to expire today at the close. I do not think the stock is gonna go much higher so I sold a $63 Call. It’s the only Strike Price where I could get anything because of the Expiration Date in a few hours. I have so much confidence the Stock will not hit $63 I sold the Call for a small premium of $200. It sounds small but $200 in a few hours, I’ll take it!
Sell to Open 10 10/25/19 $63.00 C @ 20¢ (+$200)
Not only did I sell this Call. Since I feel I will not get assigned, I sold another $63 Call to expire next Friday, 11/1. For this Call I received a premium of $1.
I received 20¢ for 1 Call and $1 for the other. The stock was at the same price! The difference in the Time Value. Time Value and Time Decay is very important to understand if you want to be an options trader.
Sell to Open 10 SQ 11/1/19 $63.00 C @ $1.00 (+$1000)
The Trade above to expire today gets a Risk Factor 1. This is a Covered Call to expire today. The second trade I’ll give a Risk Factor 2. This will be a Risk Factor only until the close today. Then that will become a Covered Call when the 1st trade expires. If for some reason I’m wrong and the stock goes up above the $63 Strike, I’ll get assigned. If that happened I’ll buy another 1000 shares to cover the 2nd Call. I’ll buy the 1000 shares after the close in the after market.
Any question on these trades send me an email.
Last Wednesday I bought a Call on VIPS. I bought the 1/17/20 $9.00 Call because the stock was listed in the unusually Activity and I liked the candlestick chart. I bought a 10 contract Call for $1.30 ($1300). When reporting the trade I said I wanted to be in the trade for a week or 2. The stock has been moving and today I placed an order to get out. As I was writing the post above, selling the 2 SQ Calls, I was filled on my order. So I’m adding the report into this post. I sold my Long Call for $2.25.
10/16/19 – Buy to Open 10 VIPS 1/17/20 $9.00 C @ $1.30 ($1,300)
10/25/19 – Sell to Close 10 VIPS 1/17/20 $9.00 C @ $2.25 ($2,250)
Profit $950
I invested $1300 and made a profit of $950. That’s a 73% return in 1 week. This is the power of buying options. Let me be very clear, this is a great return, however, buying options is very dangerous! I do not do it often and when I do I go out on the Expiration Date for Time Decay protection. I knew I wanted to be in this trade for a week or 2 but I went out to January of 2020. VIPS may go up higher but I’m discipline! When I saw a great profit I jumped out. When buying options you must have your exit planned ahead of time. If you don’t do it correctly, read my lips, you will lose money!
Successful Trading,
Steve
The Options Coach