{"id":1637,"date":"2016-05-19T14:21:26","date_gmt":"2016-05-19T18:21:26","guid":{"rendered":"http:\/\/www.mainstbeatswallst.com\/?p=1637"},"modified":"2016-05-19T14:21:26","modified_gmt":"2016-05-19T18:21:26","slug":"yelp-naked-call","status":"publish","type":"post","link":"https:\/\/www.mainstbeatswallst.com\/?p=1637","title":{"rendered":"Yelp Naked Call"},"content":{"rendered":"

While I was looking at some candlestick charts I noticed the Yelp (YELP) chart had a pattern I look for when looking to sell Naked Calls. I noticed it was in a pattern called a “Raising Wedge.” Please take a look a my post called Where is U.S. Steel Going<\/a><\/span>. This post explains a Raising Wedge pattern. In the second week of February Yelp hit a low of $14.50 and has been moving up ever since. I sold a Naked Call today with the stock at $24.74. It’s had a great run! Now at the top of it’s run it’s in a wedge pattern. This normally indicates a reversal. I feel the stock is going to start moving down. With this in mind and the stock at $24.74 I sold 10 contracts of the 5\/27\/16 Naked Calls. I set the Strike Price at $25.50. This gives me a little breathing room just in case it’s not ready to go down. If it continues up I’ll have to watch and make a move if needed.<\/p>\n

Take a look at the graphic I included below. This is the wedge shape at the end of a large run up.<\/p>\n

 <\/p>\n

\"Screen<\/a><\/p>\n

 <\/p>\n

This Call has a great premium for a 1 week option. If this expires next week and I don’t have to cover the Call with buying the stock, it will be a great deal. I received a premium of $.45 ($450). I contribute the great premium to the high volatility while the stock was moving up. Here’s the sell order:<\/p>\n

Sell 10 YELP 5\/27\/16 $25.50 C @ $.45 (+$450)<\/strong><\/h4>\n

 <\/p>\n

This may not seem like a great amount of return but you have to look at the Rate of Return<\/a><\/span>. On a stock that’s at $24.74 with a premium of $450 the Rate of Return is 1.8%. I didn’t make the investment yet but if I have to cover this position it will be a nice return. If I never have to buy the stock, better yet. 1.8% on no investment!<\/p>\n

I give this trade a Risk Factor<\/strong><\/span> of 4. It is a Naked Call and they are risky. I didn’t give it a 5 because I have a little breathing room and it’s in a “Raising Wedge” pattern. Being Naked always has a higher degree of risk. I will watch closely!<\/p>\n

 <\/p>\n

Steve<\/p>\n

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

While I was looking at some candlestick charts I noticed the Yelp (YELP) chart had a pattern I look for when looking to sell Naked Calls. I noticed it was in a pattern called a “Raising Wedge.” Please take a look a my post called Where is U.S. Steel Going. This post explains a Raising […]<\/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-1637","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-qp","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1637","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=1637"}],"version-history":[{"count":1,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1637\/revisions"}],"predecessor-version":[{"id":1639,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/1637\/revisions\/1639"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}