Sold 10 PTON Naked Calls

Yesterday I bought 2000 shares of Peloton (PTON) at $59.90 and sold 20 7/10/20 $60 Calls. The selling of these Calls gave me a premium of $2 for $4000.

PTON is on a run and is a very hot stock. How high can it go? Who knows? But I feel it might slow down a little, while it continues up at a slower pace.

With this in mind I just entered a position doing my favorite strategy with PTON. My favorite strategy is Naked Calls. I haven’t done many recently because of the market movement, but with my feeling about PTON I just entered a 10 contract Naked Call with a $65 Strike Price. This Naked Call is about 3 and a half dollars Out-of-the-Money, and it expires this Friday. I received a premium of 50¢.

Sell to Open 10 PTON 7/10/20 $65.00 C @ 50¢ (+$500)

With this Naked Call I placed a “Buy-Stop” Order at $64.50. If the stock gets up to $64.50 my broker will automatically buy the 1000 shares to cover the Call (the execution of this buy order is not guaranteed).

This is my favorite strategy because I love bringing in premiums without making an investment. If PTON never gets to $64.50 before Friday I will not buy the stock and I’ll keep the $500 without making an investment.

However, this is a hot stock, so even with my “Buy-Stop” order on I still give this trade a Risk Factor 3. This trade carries some danger.

Successful trading,

Steve

The Options Coach