I just made 2 trades. One was a 20 contract Covered Call with Peloton (PTON) and the other a 10 contract Naked Call with Advanced Micro Devices (AMD).
On 10/14 I bought 1000 shares of PTON at $132.50 and on 10/16 I bought another 1000 shares at $139. I now own 2000 shares at an average of $135.75. I had sold Calls on all these shares a few times but then the COVID stocks pulled back on the announcement of the vaccine, which PTON is one of. Since the announcement I haven’t been able to get a Call sold. With the stock bouncing back today I got a Call sold. To get a decent premium I went out 25 days on the Expiration Date to Dec 24th. I sold 10 PTON 12/24/20 $135 Calls for a premium of $2.15 for $4300. This Call expires in a little over 3 weeks, which is a little longer that normal, but $4300 is a nice Christmas present.
Sell to Open 20 PTON 12/24/20 $135.00 C @ $2.15 (+$4300)
I’m in the stock at $135.75 and sold the $135 Call so if the stock makes a big move and I get assigned I’ll lose 75¢ on the stock sale. That’s a total of $1500. I made this trade because I don’t think the stock will get to $135. But because of the risk of losing the $1500 on the sale the trade gets a Risk Factor 2. Overall I wouldn’t lose money because of this premium and past premiums.
AMD is up $5 today. I don’t think it will continue up at this pace. This is why I sold 10 AMD 12/4/20 $96 Calls for a premium of $1.10 for $1100.
Sell to Open 10 AMD 12/4/20 $96.00 C @ $1.10 (+$1100)
I sold the Call with the stock at $92.10. If the stock continues up and approaches my Strike Price of $96 I’ll buy the shares to cover the Call. However, this is a Naked Call on a very hot stock so the trade gets a Risk Factor 5.
Successful trading,
Steve
The Options Coach