Filled on Trade Orders with AMD & CREE
We had a few more readers subscribe to Main Street beats Wall Street yesterday. I would like to welcome you to the world of options trading. If you have any questions, and you should, email me any time.
Most readers know I recently had shoulder surgery. It’s been a few months now but I’m still in PT and recovering. Today I had a follow up appointment with my surgeon. Before I left my home I placed 2 trades. I placed a trade to sell a 5 contracts Covered Call with Advanced Micro Devices (AMD) and I placed an order to buy 1000 shares of Cree (CREE) at $112.50. I just returned from my appointment and I was filled on both trades orders.
On 3/11 I bought 500 shares of AMD at $81.07. I’ve been selling Calls against these shares since 3/11. The only week I didn’t get a Call sold is this week. The stock dropped back to $75 with the worldwide chip shortage, and the NASDAQ sell-off. Yesterday and today the stock recovered nicely, as I write the stock is at $81. Today being the last trading day of the week I cannot get a good premium for a 1 day trade. I placed my order to sell the Call with next Friday being my Expiration Date. I placed the order to sell 5 AMD 4/9/21 $81.50 Calls for a premium of $5.10 and I was filled for the premium of $550.
Sell to Open 5 AMD 4/9/21 $81.50 C @ $1.10 (+$550)
This trade is a Covered Call on previously owned stock so it gets a Risk Factor 1. This premium is a 1.3% return in 1 week, and fits into my “1 Week/1%” strategy.
For the new readers, this is the type of trade and return I look for. Trading options is not a “get rich quick” scheme. It’s slow and steady, steady and slow. If you look to get rich quick you will be losing a lot of money!
I bought 1000 shares of Cree on 2/22 for $121.50. I brought in some good premiums but the stock did sell-off. Yesterday with the stock in the $107 area I decided to take a chance and sell a $113 Call. This was taking a big chance because I’m in the stock at $121.50 and if I get assigned I’d lose a lot on the stock sale.
Today the stock took off and was well above my $113 Strike Price. This was a problem! When I was ready to go to the doctors the stock started to pull back. I placed an order to buy another 1000 shares at $112.50 so if I was assigned at the close I would have the shares to deliver at $113. I did not want to deliver my shares I bought at $121.50. Thank God! When I got home I noticed I was filled on my order to buy 1000 shares at $112.50. My $113 Call was now covered with the shares I bought at $112.50. As I write the stock is at $113.92. If the stock stays above $113 until the close I’ll get assigned and now I’ll make another 50¢ on the stock sale because I bought the shares at $112.50 and I’d be assigned at $113.
Buy 1000 Shares CREE @ $112.50
I hope this explanation makes sense. If not send me an email. This is very important to understand. The Call I sold yesterday is listed below. This trade is now a Risk Factor 1.
3/31/21 – Sell to Open 10 CREE 4/1/21 $113.00 C @ 25¢ (+$250)
Now that I’m Covered on this Call with these new shares I hope we have a big close going into Easter weekend. My account had a big day yesterday, another big one would be fantastic!
Successful trading,
Steve
The Options Coach