U.S. Steel Grasshopper Trade
On 5/11 I bought 200 shares of U.S. Steel (X) and sold a 2 contract Call as a Grasshopper Trade. When that Call expired without assignment I continued owning the 200 shares. The stock pulled back to the point I couldn’t get a decent premium for another 1 week Call.
The industrial sector was hot, then it wasn’t! This is the type of market we are dealing with right now.
I do not believe in buying more stock to “average down” with a falling stock. However, I don’t look at X as a falling stock. I look at X as a stock that pulled back because congress cannot make a decision with the infrastructure bill. Once we have a bill I think X, and the rest of the “infrastructure stocks” will move up.
Yesterday I bought 200 more shares of X at $24.50 to average down on a stock I think will move up as soon as congress can get some work done. I now own 400 shares at an average of $26.25. I still didn’t like the premium for the $26.50 Calls so I decided to just sell a Call on the 200 shares I bought at $24.50 yesterday. I sold 2 $24.50 Calls for a premium of 45¢ to expire this Friday. My total premium is $90.
5/25/21 – Buy 200 Shares X @ $24.50
5/26/21 – Sell to Open 2 X 5/28/21 $24.50 C @ 45¢ (+$90)
This is basically a 2 day trade and I received a return of 1.8%. This is a very nice Trade! I invested $4900 for a 1.8% return in 2 days. This is what I’m in this game for. There are many trades that will give you a higher percentage but if you constantly go for them you will lose money! I guarantee it! The trades with higher premiums are on stocks with higher volatility. Looking for these trades is a recipe for losing money. This game is hard enough when taking just 1% or 2% a week. I challenge you to stick to these discipline rules. You will do better! Just do the math. If you did 2% a week, that’s 100% a year. I know it feels better crushing the profits but if you get used to that game you will give back all the profits.
I also made a Grasshopper Trade with SLV.
Back on 2/1/21 I bought 600 shares of SLV at 26.60. This ETF is down a little and it’s tough getting a good premium. I decided to sell 6 contracts of the SLV 6/18/21 $26.50 Calls for a premium of 60¢. 100 shares of this has been listed as a Grasshopper Trade since the beginning so I’ll list it that way now. The 5 contracts are listed with my larger trades and the 1 contract is listed in “The Grasshopper Fiend.”
2/1/21 – Buy 100 Shares SLV @ $26.60
5/26/21 – Sell to Open 1 SLV 6/18/21 $26.50 C @ 60¢ (+$60)
I had to go out a bit with the Expiration Date but I’m bringing in money. This return for the 1 month trade is 2.25%. Not the best but sometimes you have to do it. These shares are working and I don’t have to look at them for a while. For the entire 6 contracts I brought in $360. Hey, it’s a good dinner for 2 lol.
Watch for Nvidia earnings coming out after the close. I think they’ll be good and there’s a 4:1 split coming in July. I still think they’ll be a pullback in the next week or 2. That’s what I’m waiting for before I get in. I’d like to get in at $620 with a LEAPS for my split strategy.
Any questions on these trades send me an email.
Successful trading,
Steve
The Options Coach