I have 2 Naked Calls expiring today. I just covered 1.
The markets are hanging around the even point but Advanced Micro Devices (AMD) and U.S. Steel (X) are showing some strength.
I decided to cover X. I had a 10 contract Covered Call all week buying the stock at $13.50 and selling the $13.50 Calls. This wasn’t a huge position, but I respect all, and I scratch to bring in all the money I can. This was an At-the-Money Covered Call for a premium of $450. It might not sound like much for the adjustment trades I’m making, but remember, it’s all about the Rate of Return. This investment brought in a 3.3% return in one week. This is the type of deal I trade for.
As I write the market just started down a bit with the wholesale inventory report. News moves the markets!
When I made the original trade I didn’t want to buy X, but I did. When the stock went up to $13.70 I felt it would go back down so I sold my stock, going naked. I made $200 on the sale. The stock did go down and I felt I would stay naked until the Call expired. Today the stock is showing some strength so I decided to buy the stock and cover the Call, again. I just bought 1000 shares of X at $13.42. As I’m writing the stock just went above my Strike Price of $13.50, and I hope it stays above my Strike so I get assigned. If not I’ll sell another Call before the close to expire next Friday.
Buy 1000 Shares X @ $13.42
I now have a Covered Call. My X trade is now a Risk Factor 1. In the beginning it was a 3 but it’s showing strength so I’m not in fear of the bottom falling out.
I am still naked on my AMD Call. Which is also showing some strength with the markets down. This is a $36.50 Call, and as I write the stock is at $36.35. I’ll watch this closely, it might be a photo finish. The candlestick chart leads me to believe the stock will have a pull back. And the Relative Strength Index (RSI)is in overbought territory, in both, the 1 minute and the daily candlestick chart.
I’ll post a report if I cover the AMD Call.
Successful trading,
Steve
The Options Coach