TWTR Triple Play Hedge, Plus a NVDA & UAL Trade.
I have a Covered Call going with Twitter (TWTR) which I got into last Thursday. I bought 1000 shares at $28.30 and sold 10 contracts of the 5/1/20 $29 Calls. This trade gave me a premium of $1.75 for $1750.
Today with the stock up well over $1 I don’t feel it will go up much more this week. At least not 3 more dollars. To make my Covered Call a Triple play Hedge I sold 2 more Call which will also expire this Friday. These are Naked Calls. I sold the $32.50 Call and the $34 Call. Both 10 contracts. For the $32.50 Call I received a premium of $1.03 and the $34 Call 75¢. Below are the 2 new Calls I added to make my Covered Call a Triple Play Hedge.
Sell to Open 10 TWTR 5/1/20 $32.50 C @ $1.03 (+$1030)
Sell to Open 10 TWTR 5/1/20 $34.00 C @ 75¢ (+$750)
The Covered Call part of this trade had a Risk Factor 1, but not that it’s a Triple Play Hedge the entire position gets a Risk Factor 3 because of the 2 Naked Calls. The Triple Play Hedge brings in a total premium of $3530. If TWTR stays below my $32.50 Strike this well be a fantastic trade!
In addition to these trades I also made 2 more trades. I bought 2 contracts of the Nvidia (NVDA) 9/18/20 $295 Calls. NVDA is a very hot stock. I paid $41.90 for these Calls. I hope to be out of this position in a week or two with a $1000 profit. The premium will have to go up $5.
Buy to Open 2 NVDA 9/18/20 $295 C @ $41.90
I own 1000 shares of United Airlines (UAL) at $28. Last week I did a Triple Play Hedge and was not assigned on any of the Calls. Today with the stock at $26.15 I sold an At-the-Money Call for a premium of 50¢ for $500.
Sell to Open 10 UAL 5/1/20 $28.00 C @ 50¢ (+$500)
After getting a large amount of premiums with my Triple Play Hedge last week this trades gives me a Rate of Return of 1.7%. This trades gets a Risk Factor 1.
Successful Trading,
Steve
The Options Coach