Making \u201cAdjustments Trades\u201d is a very important part of trading options. I just made one with one of my Micron (MU) positions.<\/p>\n
Not that this was a very important Adjustment Trade but you must learn to use them when trading to better positions. 2 Days ago I did a Buy-Write with Mu. I bought 1000 share at $47.15 and sold a 10 contract Call to expire tomorrow, Friday. I received a premium of 62\u00a2 for $620.<\/p>\n
Yesterday the stock went down with the rest of the market. Today it\u2019s bouncing back and is up over $1. Because of the drop in the stock price and Time Decay<\/a><\/span> working on overtime, my 62\u00a2 premium is down to 5\u00a2. I could have held out until tomorrow and let it expire but I decided to do a Buy to Close and close the position. This Buy to Close cost me 5\u00a2 for a total $50. Remember, this is a Short Position<\/span>,<\/a>\u00a0you want the premium to go down. Below are the trades, 1 getting into the position and the other getting out.<\/p>\n 7\/30\/19 \u2013 Sell to Open 10 MU 8\/2\/19 $48.00 C @ 62\u00a2 (+$620)<\/strong><\/p>\n Buy to Close 10 MU 8\/2\/19 $48.00 C @ 5\u00a2 (-$50)<\/strong><\/p>\n Why did I do this?<\/p>\n The reason is because Micron is moving back up, but I don\u2019t think it will get up to the Strike Price. So I feel I would not have gotten assigned only shares. I think it will continue up but not to $48 by the close tomorrow. If I\u2019m correct, and the stock does go up but not to the $48 Strike, later today or tomorrow I can sell another Call to expire next week. If the stock goes down from here and I don\u2019t get another Call sold the only thing I lose is the $50 I spent to close the position. This \u201cAdjustment Trade\u201d give me the opportunity to get another Call sold and make more money. If I didn\u2019t do the Adjustment Trade I would have to wait until Monday to sell another Call. If I get it sold today or tomorrow the premium will be higher because it has more Time Value<\/a><\/span>.<\/p>\n Another reason I like to get out of positions is if the premium is 5\u00a2 or under you can make the trade commission free. I guess the brokers do this to give you the opportunity to get into another trade.<\/p>\n If you have any questions send me an email.<\/p>\n Steve<\/p>\n The Options Coach<\/em><\/p>\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Making \u201cAdjustments Trades\u201d is a very important part of trading options. I just made one with one of my Micron (MU) positions. Not that this was a very important Adjustment Trade but you must learn to use them when trading to better positions. 2 Days ago I did a Buy-Write with Mu. I bought 1000 […]<\/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-5415","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\/p75MP0-1pl","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/5415","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=5415"}],"version-history":[{"count":2,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/5415\/revisions"}],"predecessor-version":[{"id":5681,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/5415\/revisions\/5681"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Profit +$570<\/strong><\/span><\/h4>\n