Made Trades With NTNX and OXY
Last week I did a 5 contract Covered Call with Nutanix (NTNX). I bought 500 shares at $23.70 and sold a $24 Call. The stock shot up to almost $25. I felt I was gonna be assigned at $24 so I bought another 1000 shares at $24.65. At this point I owned 1500 shares ready to lose 500 of them to assignment. Well, the stock backed off on Friday and I was not assigned.
This morning I started the week with the 1500 shares. The stock is up today. I don’t want to hold 1500 shares so I sold my original 500 shares at $24.15. The result is I started the week with a $225 gain.
5/29/20 – Buy 500 Shares of NTNX @ $23.70
6/8/20 – Sell 500 Shares NTNX @ $24.15
Profit +$225
After this sale I now hold 1000 shares at $24.65. With the stock up at $24.50 I just sold a 10 contract $25 Call to expire this Friday. I received a premium of 55¢ for $550.
Sell to Open 10 NTNX 6/12/20 $25.00 C @ 55¢ (+$550)
This trade gives me a Return on Investment (ROI) of 2.2% for the premium only. If I get assigned I’ll make another 35¢ ($350) on the stock sale. Then the ROI will be 3.6%. This trade gets a Risk Factor 1.
I also made a trade with Occidental Petroleum (OXY). The oil stocks have been on a crazy run the past week. OXY moved from under $13 to a high today of almost $24. I don’t see this stock continuing at the same pace. Today I sold a 10 contract Naked Call. Naked Call are very dangerous with hot stocks so I’ll have to watch this very closely.
With the stock at $23.40 I sold a 10 contract $27 Naked Call to expire this Friday. I received a premium of $1 ($1000). This is a very high premium. It’s caused be the volatility. The good thing is when I sold the Call it was $3.50 Out-of-the-Money. This gives me a lot of room to cover if the stock continues up. I do not think OXY will hit $27 by Friday. The stock already backed off. As I write the stock is at $22.25. If the premium drops down to 50¢ today I’ll probably jump out locking in $500.
Sell to Open 10 OXY 6/12/20 $27.00 C @ $1.00 (+$1000)
A Naked Call is always dangerous, but since this one is $3.50 Out-of-the-Money it gets a Risk Factor 3 and not 5.
I just looked at the Option Chain, the last trade on this option was for a premium of 60¢. I just entered a Buy to Close for 50¢. If I get filled it will be a $500 profit. I’ll let you know as soon as I get filled. If I do!
Successful Trading,
Steve
The Options Coach