Out of My Triple Play Hedge

With United Airlines (UAL) down today I jump out of all positions in my Triple Play Hedge. It’s only Wednesday, and I had a nice profit on all 3 of my Short Calls, so I decided to get out and hopefully I’ll be able to get the 3 Calls sold again tomorrow. We’ll have to watch and see.

At this point, let’s take a look at how the Triple Play Hedge worked. I bought 1000 shares of UAL. I sold 3 Calls as hedging. If the stock goes down my 3 Short Calls will increase in value. As I write, UAL is down $1.85 today. Thats $1850 on my 1000 shares. If I never sold a Call my account would be down the $1850.

I sold 3 Calls with the Strike Prices of $28, $31 & $32. My $28 Strike brought in $1700. I just did a Buy to Close which cost me $300. This is a profit of $1400. My $31 Call I have a profit of $500 and my $32 Call I have a $400 profit. This is a total profit of $2300. These positions are closed! The profit is locked in! My stock is down $1850, if I never did a Triple Play Hedge my account would be down the $1850. With my Triple Play Hedge my account is up $450 ($2300 – $1850 = $450).

What do I want to happen from here. I hope UAL recovers today or tomorrow and I get another 3 Calls sold to do another Triple Play Hedge with higher Strike Prices. Take a look at all the trades below.

4/20/20 ($28.00) – Sell to Open 10 UAL 4/24/20 $28.00 C @ $1.70 (+$1700)

4/22/20 – Buy to Close 10 UAL 4/24/20 $28.00 C @ 30¢ (-$300)

 Profit +$1400

4/21/20 – Sell to Open 10 UAL 4/24/20 $31.00C @ 60¢ (+$600)

4/22/20 – Buy to Close 10 UAL 4/24/20 $31.00 C @ 10¢ (-$100)

   Profit +$500

4/20/20  – Sell to Open 10 UAL 4/24/20 $32.00 C @ 45¢ (+$450)

4/22/20 – Buy to Close 10 UAL 4/24/20 $32.00 C @ 5¢ (-$50)

Profit $400

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As I write, UAL is up to $26.15. Hopefully I get my Calls sold today.

If you have any questions why I like my Triple Play Hedge strategy, if conditions are correct, send me an email.

Successful Trading,

Steve

The Options Coach