The crazy trading day continues! I am very sorry for so many emails but “Main Street beats Walls Street” is all about seeing my trades as I make them. And today I happen to be making a lot of trades.<\/p>\n
Early in the day I did a Triple Play Hedge. I asked the readers to go to the page and make sure you understand how it works. I hope you did read the page and I hope you understand how it works.<\/p>\n
This Triple Play Hedge was on U.S. Steel (X). As the day progressed the stock went down a bit and my account was protected from the fall of the stock because of my Triple Play Hedge. To recap, I had 1 Covered Call and 2 Naked Calls. When the stock went down in value the value of my Short Calls went up. While the value of the Naked Calls was up, I decided to buy them back. Originally I bought 5000 shares of the stock and sold 50 contracts of the Covered Call. To complete the Triple Play Hedge I sold an additional (2) 50 contract Naked Calls. These 2 Naked Call, I just bought back to end the deal. Now I only hold the stock and the 1 Call which is the Covered Call.\u00a0The 1st Naked Call was the $17.50 Call which I received a premium of $.55 on the sale. I just bought it back for $.34. On the sale I brought in $2750 and I bought back for $1700 for a profit of $1050. Here’s the order for the buy back:<\/p>\n
Total Profit +$1050<\/p>\n
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On the 2nd Naked Call, \u00a0I sold 50 contracts of the $18 Naked Call for $.65 and bought back for $.45. I sold the 50 contracts for $3250 and bought for $2250 for a profit of $1000. Here’s the buy order”<\/p>\n
Total profit +$1000<\/p>\n
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Total profit on my Triple Play Hedge is $2050<\/strong> in a few hours and I still have a Covered Call on U.S. Steel. This worked out great and I put $2050 in my mattress in a short time. You might ask, why did I get out of this position? Well it was only a few hours old and I had a nice profit. If I held to expiration it would take another 3 weeks. I figured let me grab this nice profit and move on. You never know what tomorrow will bring. U.S. Steel might go up tomorrow and I could sell another Triple Play Hedge. For today I think it did it’s job and I moved on. No trader ever went broke taking a profit!<\/p>\n \n