I just sold a Call against my Jabil (JBL) shares.
Jabil (JBL) is a great, “A” rated stock. The problem is, I’m not sure where it fits into my 2020 plan. By now everyone problem read my Wealth Builder section. If not, please do so now.
My plan is to trade options and do 1 of 3 things with the profits. 1 is to keep part of the gains in my trading account to grow that. 2 is to buy positions that will go into my new Wealth Builder. And 3 in to take some completely out of my investment accounts to live a nice life.
As I just wrote, JBL is a great stock. I bought 1000 shares of the stock on 11/27/19 at $39.08. I bought the stock and sold a 10 contract Call as an earnings play. I sold Calls 2 weeks in a row. The 1st one was before earnings so the premium was not very high. I got 45¢ for $450. The next week I sold another, which was earnings week, for this one I got 65¢ for $650. Both times I went up a little on the Strike Price so I wouldn’t get assigned. Also with earnings I thought the stock was gonna move so I wanted to get the stock gains. The stock did move nicely and I didn’t get assigned. It really worked exactly as I wanted.
Now with no earnings in the near future I really don’t like the premiums JBL are offering. As I’m thinking where JBL fits into my 2020 plan, I’m not coming up with a good answer. I don’t want to hold it in my trading account when I don’t like the premiums. I didn’t do enough investigation to see if it satisfies my criteria for the Pillar of Strength Portfolio. It doesn’t fit into the 5 Star Trading Portfolio. And the dividend is too small for me to consider it for my new portfolio which will be high dividend stocks.
With all this in mind I decided to sell the stock and free up the cash for trading options. I bought the stock at $39.08 and today it’s at $41.50. In addition to this gain I already brought in the 2 premiums for a total of $1100.
Before selling I took a look at the 2 day premiums for the $41.50 Calls. These will expire tomorrow. The premium was at 20¢. I decided to use an old Covered Call strategy know as “getting paid to sell your stock.” Instead of just selling the stock, I sold a call with a Strike Price the same price as I was gonna sell the stock for, $41.50. This way if the stock stays above $41.50 through tomorrow I get assigned and make an extra $200. This way I got paid $200 to sell my stock. If the stock falls below $41.50 I won’t get assigned, keep the $200, and sell JBL when ever I want.
Sell to Open 10 JBL 12/27/19 $41.50 C @ 20¢ (+$200)
This trade is a Covered Call on a great stock so it gets a Risk Factor 1.
I hope this trade make sense to you. If not send me any questions.
I hope everyone had a great holiday.
We’re hoping for a nice “Santa Rally” to finish up the year on a high note. A Santa Rally is normally the week or 2 after Christmas.
Successful trading,
Steve
The Options Coach