Sold Peloton Calls

I own 2000 shares of Peloton, 1000 at $151.28 and 1000 at $167.30. The stock is way down from where I bought so I cannot get a good premium at these prices. As I did last week, I sold a Call much lower than my buy-in price. I sold 20 contracts of the 3/5/21 Calls with a Strike price of $130. I received a premium of 80¢ for $1600.

Sell to Open 20 PTON 3/5/21 $130.00 C @ 80¢ (+$1600)

When I sold this Call the stock price was $122. If I get assigned at $130 I’ll lose my stock at a price much lower than my buy-in price, to take a huge loss. I do not want to get assigned. I just want to bring in some premium while I wait for the stock to bounce back up.

I’m listing this position on my Active Trades page under Naked Calls. I’m going to treat this position like a Naked position, even though it’s covered. I’m doing this because I don’t want to deliver my stock on assignment. If the stock gets up near my Strike Price of $130 I’ll buy more shares to deliver and hold onto my shares. But because I do own shares this trade does not cut into my available buying power. Any question on this send me an email.

I hope this makes sense. I’m just navigating around road hazards that I’m confronting. Since I’m in this position I’m giving this trade a Risk Factor 4.

 

Successful trading,

Steve

The Options Coach