Last week I sold 10 contracts of Weight Watchers (WW) Naked Calls. The stock stayed below my Strike Price and the Call expired.
Today WW is down again. I’m not so sure it will continue down for the next 4 days so my strategy is a little different this week.
With the stock at $39.25, down about $2, I sold 10 $39.50 Naked Calls. I had full intentions of buying the stock to make a Covered Call but after I sold the Call the stock continued down. So as I write I’m still Naked.
Sell to Open 10 WW 1/24/20 $39.50 C @ $1.00 (+$1000)
I would love to stay Naked but I think the stock will rebound this week. With this in mind I placed a “Buy Stop” at $39.40. If the stock gets up to #39.40 I’ll buy the stock and this will be a Covered Call.
This trade get a Risk Factor 3. I do have the Buy order in but if the stock shoots up over night I could get burned because my “Buy Stop” order will not get filled when the market is closed. I feel the premium was worth a little risk. The $1.00 premium on a $39.25 stock is a 2.5% return for the premium only.
I’m still waiting to get a Call sold on my 200 Apple shares.
Successful trading,
Steve
The Options Coach