I know I didn’t write my page on Candlestick Charts yet. I’ve been so busy Trading and running my business, Fiore’s Pizza. In this post I’ll be referring to a Candlestick Chart so it might be difficult for you Grasshoppers to understand. Grasshoppers, if you want to try to understand I will let you know what you should Google so you can learn a little about a trade I just made.
With U.S. Steel (X) at $19.15 I sold an In-the-Money Naked Call. This is one of the most dangerous trades you can make. The Risk Factor of this trade is a 5. With the stock at $19.15 I sold 50 contracts of the $19 Naked Calls. This Call will expire tomorrow and I received a premium of $.50. On 50 contracts that’s a total premium of $2500.
Why did I do this? #1, I still think X will be going down. #2, It’s May and I think most stock will stay even or go down. Read my Message of the Day for May 2nd. #3, I’m having a good week, already putting over $3000 in my mattress. I hate losing money but if this doesn’t work out so well at least I’m trading with “Wall Street’s” money. #4, probably the most important is the Candlestick Chart for X is in a “Raising Wedge” pattern. You can hit the link I set up and also Google to get more information. With X moving up in recent months, the Raising Wedge is a reversal pattern. I believe this indicates X will be going down. I just hope it starts today or tomorrow and the stock stays below my Strike Price of $19. Here’s the sell order:
Sell to Open 50 X 5/6/16 $19 C @ $.50 (+$ 2500)
This is not my normal type of trade and I don’t recommend selling In-the-Money Naked Calls for anyone.
As I finished this post X is at $18.95. Come-on gravity do your work on X!
Steve
The Options Coach