Results Week Ending 11/5/21
This week was going to be one of my biggest weeks of the year. The only week bigger was the week ending 2/12/21. How did I know it was gonna be a big week? Because I started the week with a huge gain with NVAX and as the week moved on it was clear TSLA was gonna give me more huge gains.
So, why do I say “was going to be one of the biggest weeks of the year?”
Well, I say that because it WAS going to be a great week but it turned out to not be. I hope there are not too many readers who scan down to the week’s total and move on because there is a huge lesson to be learned with this post.
The lesson begins with reminding you to stick to your rules! Your rules are in place for a reason, to protect you! This week I broke a big rule and I paid dearly. I knew I was breaking a rule. I wrote about being in a position breaking a rule. And I wrote that I was worried about the position. I knew it was gonna be a problem but the gambling chromosome came out and I got burned.
Why did I take the gamble? Well, I knew I was gonna have a big week. I guess I felt I was playing with their money and I was going for an even bigger week. That’s called GREED! And it will burn you every time.
The positions I wrote about earlier this week were with SQ and PTON. I owned 1000 shares of each from the previous week. I wasn’t assigned on my Covered Calls and I stayed in the positions this week. The only problem was both companies were reporting earnings on Thursday. The post I wrote this week with the message about being worried is in Out of a Tesla Call. I broke an important rule and there’s a big lesson to be learned. Please read the page My Philosophies & Strategies. Especially the section under the title “NEWS.” On that page it states, “It’s news that moves the market! One of my rules is not to get into a position if news is imminent on a stock. For example, if earnings are due out on the stock. The earnings report is a news item that can make a stock move up or down big, and fast, while the market isn’t open.”
I broke this rule! Their earnings report was coming out before the expiration of my Covered Call and I paid for my mistake. With SQ I owned 500 shares at $258 and 500 shares at $261. I sold 10 contracts of the $262.50 Calls for a premium of $3500. With PTON I own 1000 shares at $93 and I sold 10 contracts of the $95 Calls for a premium of $3000.
The reason I stayed in these stock positions is because both were below my buy-in price. If I didn’t want to be in these stocks through their earnings report I would have sold the stocks for a loss. Since I was having a big week I decided to ride it out, take in the great premiums and hope for the best. BAD MISTAKE!
I’m not as worried with the SQ position as I am with PTON. While SQ closed on Friday at $238, this is a great stock and it will come back. With PTON I’m extremely worried! While their earnings were not as bad as it seems they came out with horrible guidance for the next year. While we get more into living normal lives, and people are leaving their homes to go to the gym, PTON’s sales will suffer. After the earnings report the stock tanked $35. Remember I own 1000 shares!
I knew the earnings were not going to be good but I stayed in anyway. I looked at the past results and how the stock dropped after earnings and it was $6 or $7. I figured with my great week I could absorb this. But the stock dropping $35 in the aftermarket is a problem.
The bottom line is, I broke a rule and now I’m paying! The good news, if there is any, is I keep the premiums of $3500 and $3000. Also, on Friday I sold another 5 contract Call with PTON. This was a Naked Call. I had a strong feeling the stock would not recover to my Strike Price of $95. This Day Trade Call gave me another $1000 to help the blow.
Below you will see I made big money this week. The losses with SQ and PTON are not included yet because I’m still in the positions. I’ll have to watch what happens this week. I have a feeling I’ll stay with SQ and sell Calls as it recovers, but with PTON I feel I’ll be posting the loss this week. My hope is the stock will pop after the big gap down. This is doubtful because Wall Street is down on the stock at this point.
The lesson is, DO NOT BREAK THE IMMINENT NEWS RULE!
Now that we see the huge mistake I made, let’s take a look at the week I had.
NVAX made a big move with me owning 300 shares and I got out to start the week.
10/20/21 – Buy 300 Shares NVAX @ $145.20
11/1/21 – Sell 300 Shares NVAX @ $165.00
Profit +$5940
TSLA has been on a crazy run. Not only did I buy the stock and sell Calls I also bought a 1 contract option. I held it for 2 day and got out with a great profit. I could have held longer but with TSLA’s move it might be ready for a little sell-off. The RSI is through the roof. If it sells off I’ll be ready to get back in with a Call or 2.
11/2/21 – Buy to Open 1 TSLA 3/18/22 $1175.00 C @ $165.00
11/4/21 – Sell to Close 1 TSLA 3/18/22 $1175.00 C @ $225.00
Profit +$6000
Selling this position got me completely out of my MCHP split strategy plays. I got out a little early. The stock moved up a few more points. You cannot worry about this! You will never buy or sell a position at the perfect time.
Post 2:1 Split “Sell to Close”
9/28/21 – Buy to Open 5 MCHP 1/21/22 $160.00 C @ $11.50 ($5.75 post split)
11/4/21 – Sell to Close 10 MCHP 1/21/22 $80.00 C @ $6.80
Profit +$1050
11/1/21 – Sell to Open 10 PLTR 11/5/21 $26.50 C @ 50¢ (+$500)
11/5/21 – Expired 10 PLTR 11/5/21 $26.50 C
Profit +$500
This TSLA Covered Call worked out great. I bought the 100 shares at $1135 and sold the $1200 Call. This was a nice profit with the assignment.
Assigned Covered Call
11/1/21 – Buy 100 Shares TSLA @ $1135.00
11/5/21 – Assigned 100 Shares TSLA @ $1200.00
Profit +$6500
11/1/21 – Sell to Open 1 TSLA 11/5/21 $1200.00 C @ $22.00 (+$2200)
11/5/21 – Expired 1 TSLA 11/5/21 $1200.00 C
Profit +$2200
The next 2 positions started as a Covered Call. I bought 100 shares of the stock at $1164 and sold the $1250 Call. On Friday, Expiration Day, I felt the stock was not going to my Strike Price and I wouldn’t get assigned. With the weekend coming I decided to sell the stock at a nice profit and I went Naked on the Call. Being in a Naked Call with TSLA you can bet I sat at my computer for the rest of the day with my finger on the “Buy” button in case it made a move. With my Strike Price at $1250 I sold the stock at $1235. The stock closed at $1222 so this move worked well. Even with the added stress of the possibility of the stock moving above the $1250 Strike.
It didn’t look like I’d get assigned and I didn’t want to go into next week holding TSLA after the huge move. If it continues to move on Monday I’ll be back in. Any questions on this move send me an email.
11/2/21 – Buy 100 Shares TSLA @ $1164.00
11/5/21 – Sell 100 Shares TSLA @ 1235.00
Profit +$7100
11/1/21 – Sell to Open 1 TSLA 11/5/21 $1250.00 C @ $12.00 (+$1200)
11/5/21 – Expired 1 TSLA 11/5/21 $1250.00 C
Profit +$1200
This is the killer PTON position! But until I take the big loss I’ll keep this $3000 premium.
11/1/21 – Sell to Open 10 PTON 11/5/21 $95.00 C @ $3.00 (+$3000)
11/5/21 – Expired 10 PTON 11/5/21 $95.00 C
Profit +$3000
Knowing I was taking a huge loss this is the Day Trade I made to grab another $1000. This didn’t make me feel much better.
11/4/21 – Sell to Open 5 PTON 11/5/21 $95.00 C @ $2.00 (+$1000)
11/5/21 – Expired 5 PTON 11/5/21 $95.00 C
Profit +$1000
This is the killer SQ position. The $3500 premium helps a little!
11/3/21 – Sell to Open 10 SQ 11/5/21 $262.50 C @ $3.50 (+$3500)
11/5/21 – Expired 10 SQ 11/5/21 $262.50 C
Profit +$3500
This is a small trade I made to bring in a little premium on one of my crap stocks.
11/3/21 – Sell to Open 4 NKLA 11/5/21 $15.00 C @ 26¢ (+$104)
11/5/21 – Expired 4 NKLA 11/5/21 $15.00 C
Profit +$104
NVDA has been on a run so I did a 1 contract Covered Call. I didn’t get assigned so I’ll sell another Call this week.
11/4/21 – Sell to Open 1 NVDA 11/5/21 $300.00 C @ $1.55 (+$310)
11/5/21 – Expired 1 NVDA 11/5/21 $300.00 C
Profit +$310
Some of you loyal readers know I did a Triple Play Hedge with BBIG a few weeks ago. This is the expiration of the 3rd Call. The 3 Call brought in premiums of $400, $450 and this one for $500. The Triple Play Hedge worked well. The stock is down a bit but I’ll try to do another this week.
10/14/21 – Sell to Open 10 BBIG 11/5/21 $10.00 C @ 50¢ (+$500)
11/5/21 – Expired 10 BBIG 11/5/21 $10.00 C
Profit +$500
Total Weekly Gain +$38,904
What a great week this would have been if I didn’t get weak with SQ and PTON. Oh well, there is crying in the stock market but not when you have a week like this. I will move on and try to stick to my rules.
Let’s watch this week to see how SQ and PTON start. I have a feeling PTON will not be good so I might have some more money to lose before I can get out.
Have a great weekend!
Successful trading,
Steve
The Options Coach