This was another great week! I love having a week where I put over 10 grand in my mattress, dealing with only one stock! That’s what I did this week. I only had positions expiring with Yelp (YELP).<\/p>\n
If you look at my “Trade History<\/a><\/span>” or “Active Trades\/Current Positions<\/a><\/span>” you will see I sold a Naked Call on YELP. On 7\/25\/16 I sold 50 contracts of the YELP $30.50 Calls expiring four days later on 7\/29\/16. When Friday 7\/29\/16 came around YELP had made a move and I was In-the-Money<\/a><\/span>. Meaning YELP was above my Strike Price. I had to make an adjustment trade which was a Roll Out<\/a><\/span>. If you look at the trades below, you will see when I sold the Call I received a premium of $.35. On the 50 contracts (5000 shares) the total premium was $1750. If you’re a Grasshopper<\/a><\/span> and don’t understand the “Option Order form<\/a><\/span>” please hit the link and understand each figure in the order form.<\/p>\n You can see this option brought in $1750. Since, on Expiration Day, I was In-the-Money I had to do a Roll Out or I would have had to deliver the stock which would have made me lose money. The stock was at $32. I would have had to buy the 5000 shares at $32 and deliver them for my Strike Price of $30.50. I would have lose $1.50 on the 5000 shares for a total of $7500. You know I didn’t want to do that! So I did a Roll Out adjustment trade. This entailed buying back my Call and Rolling Out with the selling of another Call. It cost me $1.55 to buy back the Call. On the 50 contracts it cost me $7750. That in it’s self was very scary. You must have a stomach for this business. Below is the “buy to close<\/strong>” order.<\/p>\n At this point I was down $6000. I brought in $1750 by selling the Call and paid out $7750 with the buying back of the Call, -$6000. Below you will see the order form for the selling of the Rolled Out Call. Selling this Call brought in $1.50 for a total of $7500. This sale completed the Roll Out adjustment trade.<\/p>\n With this Call I was able to get a nice premium ($1.50) going out only two weeks because the earnings report was due out during this week. The premiums were very high. I was also able to raise my Strike Price to $34.50. Because I was expecting good earnings I covered this Call with the buying of the 5000 shares at $32.75. I will get into this part of the trade below. It worked out that earnings came out great and YELP took off and on expiration day the stock closed at $38.48. Now I had a Covered Call so my Call Option expired and I keep all the premium. Let’s review the numbers for the Roll Out. First Call sold +$1750, buy back Call -$7750, second Call sold +$7500. Add these numbers and you will see I came out +$1500. This is the power of a Roll Out. I turned a -$6000 to a +$1500 with a Roll Out. This Roll Out worked out great!<\/p>\nSell to Open 50 YELP 7\/29\/16 $30.50 C @ $.35 (+$1750)<\/strong><\/h4>\n
Buy to Close 50 YELP 7\/29\/16 $30.50 C @ $1.55 (-$7750)<\/strong><\/h4>\n
Sell to Open 50 YELP 8\/12\/16 $34.50 C @ $1.50 (+$7500)<\/strong><\/h4>\n