Skyworks Solutions Covered Call

I was aiming at Skyworks Solutions (SWKS) for a Covered Call yesterday. The stock was in the $129.70 area. I wanted to sell the 3 day $130 Call.

Yesterday while looking at the possible trade it looked like the stock was gonna pull back so I sold 3 SWKS 6/19/20 $130 Calls for a premium of $2.10 for  $630 on the 3 contracts. You should buy the stock first then sell the Call, but since I felt the stock was gonna move down I sold the Call first. This turned out to be a mistake because as soon as I was filled the stock started moving up. The stock moved above my Strike Price and never looked back. It went all the way up to $132. Since it looked like I’d have to deliver the stock my “adjustment trade” strategies started going through my head. However, I did have 2 more days to have SWKS move below my Strike.

This morning the stock opened above $130 but a few minutes into the day the stock dropped below $130. I ended up getting the 300 shares for $130. As I write the stock is now at $130.50. I now have a 3 contract At-the-Money Covered Call. I feel a lot better because SWKS is a very good stock.

Buy 300 Shares SWKS @ $130.00

Sell to Open 3 SWKS 6/19/20 $130.00 C @ $2.10 (+$630)

This is a Covered Call on a very good stock so it gets a Risk Factor 1.

This position gives my a Return on Investment (ROI) of 1.6% for a 2 day investment. This trade fits into my “1 Week/1%” strategy.

Successful Trading,

Steve

The Options Coach