{"id":1407,"date":"2016-03-31T11:21:59","date_gmt":"2016-03-31T15:21:59","guid":{"rendered":"http:\/\/www.mainstbeatswallst.com\/?p=1407"},"modified":"2016-03-31T11:21:59","modified_gmt":"2016-03-31T15:21:59","slug":"covered-my-u-s-steel-calls","status":"publish","type":"post","link":"https:\/\/www.mainstbeatswallst.com\/?p=1407","title":{"rendered":"Covered My U.S. Steel Calls"},"content":{"rendered":"

This past Monday, March 28th I sold 50 contracts of Naked Calls on U.S. Steel (X). When I sold the Calls the stock was at $15.65. Hit this link and you will go to the post I made when I sold the Calls, “U.S. Steel Naked Calls.”<\/a>\u00a0The 50 Naked Call contracts is an option for someone to buy 5000 shares of U.S. Steel at my Strike Price of $16.50. If the stock gets up to $16.50 I’ll have to deliver 5000 shares to the buyer of my option. The buyer paid me a premium of $.30 per share to have the right to buy the 5000 shares. The total premium was $1500, which is already in my mattress. Since Monday the market has been going up and U.S. Steel has been following along. This morning the stock went up to $17.04. This had me very concerned because I have to deliver the stock at $16.50 and I do not own the stock to deliver. Remember I sold a Naked Call. Tomorrow is Expiration Day, so if the stock stayed at $17.04 I would have to buy the stock at $17.04 and deliver it for $16.50. I would lose $.54 on the stock, 5000 shares. Thats $2700! As I write this the market is up but U.S. Steel dropped back down to $16.45. I do not want to own U.S. Steel but I decided to play it safe while I had the opportunity to buy the stock at $16.45. Now if the stock goes up I have a Covered Call and I have the stock to deliver at $16.50. If the stock stays above the Strike Price of $16.50 and I get assigned, not only would I have the stock to deliver but I would make $.05 on the stock. That will be $250 in addition to the premium of $1500. I am hoping the stock goes up and I get assigned. If the stock stays below the Strike Price on Expiration Day, I’ll sell more Calls next week. Here’s the order to buy the stock:<\/p>\n

 <\/p>\n

Buy 5000 shares X @ $16.45<\/strong><\/h4>\n

 <\/p>\n

This sort of thing happens all the time when trading options. It would have been nice if U.S. Steel never approached the Strike Price of $16.50 and the option expired, but it did get to $16.50 so you have to make adjustments to your position. Trading is never a smooth road! You always hit potholes and other road hazards. When it happens you have to make detours and take a different road. You must watch your positions and be ready to make quick moves. Which is what I did in this situation.<\/p>\n

Originally I gave the Naked Call trade a Risk Factor<\/strong> of 4 but now that I Covered my position I change the Risk Factor<\/strong> to a 1. It is now a Covered Call. A very low risk position.<\/p>\n

 <\/p>\n

It’s very important to understand Naked Calls. Make sure you read the links below.<\/p>\n

U.S. Steel Naked Calls<\/a>\u00a0– this is the post from the sale of the option.<\/p>\n

Naked Call Options<\/a><\/p>\n

Covered Call<\/a><\/p>\n

Assignment<\/a><\/p>\n

 <\/p>\n

Steve<\/p>\n

The Options Coach<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This past Monday, March 28th I sold 50 contracts of Naked Calls on U.S. Steel (X). When I sold the Calls the stock was at $15.65. Hit this link and you will go to the post I made when I sold the Calls, “U.S. Steel Naked Calls.”\u00a0The 50 Naked Call contracts is an option for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-1407","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75MP0-mH","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1407"}],"version-history":[{"count":1,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1407\/revisions"}],"predecessor-version":[{"id":1408,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1407\/revisions\/1408"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}