This week is starting off to be the first normal week in a long time. Hopefully I’ll be able to get into normal trading more often and back to posting my trades for those who want to follow what I’m doing. The reason for this normal trading is because I like where my account is. I’m no longer fighting to get back. I’m not completely back but I like where I am.<\/p>\n
Today I started the week with trades involving Twitter (TWTR) and United Airlines (UAL). Let’s take a look.<\/p>\n
On Friday I started with a Naked Call with TWTR. For you who looked at my “Active Trades” page over the weekend saw this position was listed. I sold 10 contracts of the TWTR 4\/24\/20 $27 Call for a premium of 90\u00a2 for $900. Today with the market opening lower I decided to buy the 1000 shares to cover this Naked Call. Below are the positions to make up the Covered Call.<\/p>\n
TWTR Covered Call<\/strong><\/p>\n 4\/17\/20 \u2013Sell to Open 10 TWTR 4\/24\/20 $27.00 C @ 90\u00a2 (+$900)<\/strong><\/p>\n 4\/20\/20 \u2013 Buy 1000 Shares TWTR @ $26.40<\/strong><\/p>\n I feel TWTR will get above the Strike Price of $27 and I’ll get assigned. I brought is a $900 premium for a Rate of Return<\/a><\/span> of 3.4%. If I get assigned I make another $600 on the stock sale. If this happens my total return will be $1500 for 5.6%. If I don’t get assigned I’ll sell another Call next week. This trade get a Risk Factor 1<\/strong>.<\/p>\n Who remembers my position invention, Triple Play Hedge<\/strong><\/a><\/span>? This is a strategy I use when the market is moving sidewards of down. I haven’t done \u00a0it in a while because the market has been moving great until the coronavirus collapse. Today I did a Triple Play Hedge with UAL. AS with TWTR, I sold a Naked Call on Friday but today I expanded the position. On Friday I sold 10 contracts of the UAL 4\/24\/20 $30 Call for a premium of $2.05 for $2050.<\/p>\n I’m not a fan of the airlines at this time, for obvious reasons. However, UAL is a great company and a great stock, normally! Before the coronavirus the stock was trading in the $95 area. Today I bought 1000 shares at $28 as the covering stock of my Triple Play Hedge. I expanded on my Naked Call because I saw, what I felt, was a good opportunity for my long lost strategy. If you’re interested in this position you can read about my Triple Play Strategy here<\/a><\/span>. Normally the strategy involves buying the stock and selling 3 separate Calls, in 3 different Expiration Dates, with 3 different Strike Prices. The first Call would be Covered and the other 2 Calls are Naked. The big difference in the one I did today is all the Call are expiring this coming Friday.<\/p>\n UAL Triple Play Hedge<\/strong><\/p>\n 4\/20\/20 \u2013 Buy 1000 Shares UAL @ $28.00<\/strong><\/p>\n 4\/20\/20 \u2013 Sell to Open 10 UAL 4\/24\/20 $28.00 C @ $1.70 (+$1700)<\/strong><\/p>\n 4\/17\/20 \u00a0\u2013 Sell to Open 10 UAL 4\/24\/20 $30.00 C @ $2.05 (+$2050)<\/strong><\/p>\n 4\/20\/20 \u2013 Sell to Open 10 UAL 4\/24\/20 $32.00 C @ 45\u00a2 (+$450)<\/strong><\/p>\n I know this is a complicated trade for Grasshoppers<\/a><\/span>. Here’s what I did. I own 1000 shares of the stock and have 3 Calls sold. The first is At-the-Money<\/a><\/span> and Covered. The next 2 are Naked Calls. The reason I do this is if the stock goes down my 3 Calls will increase in value. Selling a Call against a stock is actually a hedge in the case the stock goes down. In my Triple Play Hedge I have 3 Calls hedging against my stock going down. If the stock goes up I’ll buy the stock to cover the next Call as the price of the stock gets closer to the next Strike Price. If the stock goes down slightly or stays even I’ll keep all the premiums. My 1st premium is $1700, Rate of Return of 6%. My 2nd premium is 2050, a ROR of 7.3%, and the 3rd premium is $450 a ROR of 1.6%.<\/p>\n As I said, this is a complicated trade. But if you want to understand more read my page of send me an email.<\/p>\n
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