I’ve had Sarepta on my watch list for a few months now. On Friday I liked the way the charts looked and I liked the premium, 1.4%. Not bad for a 1 week trade! I really don’t like the pharmaceutical sector much but I said let me grab this 1 week trade with a nice premium and hopefully it goes well. I sold 20 contracts of the $36 3\/10\/17 Naked Calls for a 50\u00a2 premium ($1000). At the time the stock was at $34.40. When the trade got executed I noticed my margin buying power went way down. I did a little investigation a I found out that the margin requirement on this stock was 100%. Margin accounts have so many rules, some from the government and some from your broker. I’m not even going to try to explain the ramifications of getting involved in a stock with this margin requirement because I don’t completely understand it myself. You’ll have to call your broker to see how it works in your account. But it’s not good! All weekend I couldn’t wait until Monday to see what Sarepta was going to do. I was just hoping for any opportunity to get out of this trade. Lucky for me, this morning the stock opened down and at 2:15pm I was executed on a “Buy to Close.” I put in a price in at 25\u00a2 but I wasn’t executed. I was hoping to keep half the premium for the 1 trading day trade. When the order wasn’t getting grabbed I changed it to 30\u00a2 and I was executed. I just wanted out. I’m glad I am! Here’s the “Sell to Open” and the “Buy to Close” orders:<\/p>\n
Profit +$400<\/strong><\/p>\n \n I cannot believe I didn’t notice the margin requirement of 100%. The reason is because I did a Naked Call; I didn’t buy the stock. When you buy the stock the margin requirement comes up on your screen, and it doesn’t when selling options. Not only doesn’t the 100% requirement affect your margin but the broker puts that requirement because they don’t like the stock. They don’t trust that the stock isn’t going to go hey-wire and the investor isn’t ready to make adjustments. The only reason I caught it was, I noticed a big drop in my buying power. I’m glad I did and I’m glad I’m out with a nice 1 day $400 gain. Serapta is off my watch list!<\/p>\n Today the Coach learned something. Make sure you check the margin requirement before you make the trade.<\/p>\n If I made my normal 50 contract trade on this stock with this margin requirement, I would have gotten a margin call.<\/p>\n I hope this all makes sense, if not send me an email.<\/p>\n \n Steve<\/p>\n The Options Coach\u00a0<\/em><\/p>\n \n","protected":false},"excerpt":{"rendered":" I’ve had Sarepta on my watch list for a few months now. On Friday I liked the way the charts looked and I liked the premium, 1.4%. Not bad for a 1 week trade! I really don’t like the pharmaceutical sector much but I said let me grab this 1 week trade with a nice […]<\/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-2870","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-Ki","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/2870","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=2870"}],"version-history":[{"count":1,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/2870\/revisions"}],"predecessor-version":[{"id":2871,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/2870\/revisions\/2871"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}