{"id":4968,"date":"2019-04-23T14:39:41","date_gmt":"2019-04-23T18:39:41","guid":{"rendered":"http:\/\/www.mainstbeatswallst.com\/?p=4968"},"modified":"2019-05-01T10:03:05","modified_gmt":"2019-05-01T14:03:05","slug":"netflix-adjustment-trade","status":"publish","type":"post","link":"https:\/\/www.mainstbeatswallst.com\/?p=4968","title":{"rendered":"Netflix Adjustment Trade"},"content":{"rendered":"

Yesterday I sold a Call against 100 shares of Netflix (NFLX) I own. The Call expires this coming Friday. The stock was at $373.25 and I sold the $380 Call. NFLX has been on a tear lately and I thought it was time to level off. Today, with earnings season in full swing, the market continues to move up. In fact the S&P 500 is very close to it\u2019s all time high. I felt selling a Call on NFLX, $7 Out-of-the-Money, was safe because I really don\u2019t want to lose my stock to assignment. After I made the trade yesterday the stock continued up, and today also. As I write the NFLX is up another $6.40 to $383.75; it blew right through my $380 Strike Price with 4 days to expiration.<\/p>\n

When trading options, the road to success is not always a smooth road, sometimes you hit bumps, dips and detours, you must make adjustments. These road hazards cause you to make moves. These moves I call \u201cAdjustment Trades.\u201d<\/p>\n

With NFLX making a big move after I sold my Call I had a decision to make. I could just watch the stock run higher and get assigned; it is a Covered Call so I\u2019m safe from getting in trouble. However, it the stock continues higher I would have to except the Opportunity Lost<\/a><\/span> and be happy with the money I made. Or I could make an Adjustment Trade and try to make more money. Most of the time I\u2019m happy with what I signed up for and except the assignment. What makes this situation a little different is I like NFLX and I don\u2019t want to lose my stock. I feel with some of the other FANG stocks reporting earnings this week it could cause NFLX to run higher.<\/p>\n

With this in mind the Adjustment Trade I made was a Rolling<\/a><\/span> move. I rolled my Call up and out. Please read my section on Rolling.<\/p>\n

Below are the trades involved in the Roll up and out:<\/p>\n

4\/22\/19 \u2013 Sell to Open 1 NFLX 4\/26\/19 $380.00 C @ $2.50 (+$250)<\/strong><\/p>\n

4\/23\/19 \u2013 Buy to Close 1 NFLX 4\/26\/19 $380.00 C @ $6.50 (-$650)<\/strong><\/p>\n

4\/23\/19 \u2013 Sell to Open 1 NFLX 5\/3\/19 $385.00 C @ $7.50 (+$750)<\/strong><\/p>\n

The 1st trade I made yesterday. I sold the 4\/26\/19 $380 Call for a premium of $250. Today I closed this position doing a \u201cBuy to Close.\u201d To do this it cost my $650. With the stock moving up the premium also moved up. At this point I\u2019m down $400 (+$250 -$650). Then I rolled up and out with a \u201cSell to Open.\u201d I opened another position with a higher Strike Price and went out on the Expiration Date 1 week. I sold the 5\/3\/19 $385 Call for a $7.50 premium for $750. At this point I\u2019m up $350 (+$250, -$650 & +$750) in premium and I don\u2019t have to deliver the stock unless it goes above $385. If the stock continues up I\u2019ll have to make another decision. Do I except assignment or do another Roll Out? Only time will tell.<\/p>\n

Tomorrow Facebook (FB) reports earnings. The results can move all the FANG stocks.<\/p>\n

If you have any questions on Rolling please send me an email.<\/p>\n

Steve<\/p>\n

The Options Coach<\/em><\/p>\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Yesterday I sold a Call against 100 shares of Netflix (NFLX) I own. The Call expires this coming Friday. The stock was at $373.25 and I sold the $380 Call. NFLX has been on a tear lately and I thought it was time to level off. Today, with earnings season in full swing, the market […]<\/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-4968","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\/p75MP0-1i8","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/4968","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=4968"}],"version-history":[{"count":3,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/4968\/revisions"}],"predecessor-version":[{"id":5021,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/4968\/revisions\/5021"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4968"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4968"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4968"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}