Two More Grasshopper Trades to Report
Earlier I reported a Grasshopper trade with Inseego (INSG). I bought 100 shares of the stock at $19.60 and sold a $20 Call for a $1 premium. When I reported this trade I also reported that I bought 100 shares of LX and placed an order to sell a 1 contract Call.
Right after I sent out that report I had to go to PT for my shoulder. I just returned home and saw I was filled on my LX Call. I bought 100 shares at $11.25 and sold a 1 contract 2/19/21 $12.50 Call for a premium of 45¢.
Buy 100 Shares LX @ $11.25
Sell to Open 1 LX 2/19/21 12.50 C @ 45¢ (+$45)
This premium is a 4% return on my investment. If I get assigned I’ll make another $125 on the stock sale. This trade gets a Risk Factor 1.
I like both INSG and LX. I also just made another Grasshopper trade with INSG. I made this as a learning trade for Grasshoppers. This is an In-the-Money Covered Call. I bought 100 shares of INSG at $20.10. We know this stock only has monthly options. The next Expiration Date is 2/19/21. The one after that is 3/19/21. I was looking at the Strike Prices of $20 and $22.50. The $20 Call had a premium of $1.30 and the $22.50 had 53¢. If I go with the $20 I would lose 10¢ on the stock sale if assigned because I bought the stock at $20.10. But this has a very nice premium of $1.30. This is a 6.4% return. However, with an In-the-Money Call you give back some of the premium if assigned. In this situation I’d lose 10¢ on the stock sale. My gain with the premium would be $1.20. This is still a 5.9% return. I like this better than the $22.50 Call for the 53¢ premium. Especially since I want to get assigned. I have a better chance of getting assigned with the $20 Call.
Buy 100 Shares INSG @ $20.10
Sell to Open 1 INSG 2/19/21 $20.00 C @ $1.30 (+$130)
This trade also gets a Risk Factor 1. I think this will be a very good Grasshopper trade.
Please send me an email if you have any questions on the In-the-Money Covered Call.
Successful trading,
Steve
The Options Coach