Bought 1000 Shares of PTON

This past Tuesday I sold a 10 contract Naked Call on Peloton (PTON). With the stock in the $61.50 area I sold 10 7/10/20 $65 Calls for a premium of 50¢ for $500.

When I was filled on that order I placed a “Buy-Stop” order to buy 1000 shares at $64.50. In the case the stock approached my Strike Price of $65 I would be filled at $64.50 to cover my Naked Call. Well, this morning a little after the open the stock went as high as $65.25. As the stock was moving up my “Buy -Stop” order was filled. I now have a 10 contract Covered Call on PTON.

Buy 1000 Shares PTON @ $64.50

Now that this position is a Covered Call the Risk Factor is moved from a 3 to a Risk Factor 1. Now I would like to see the stock continue up to where I get assigned tomorrow. If this happens I’ll make another $500 on the stock sale.

The important thing to know and understand about this trade is that my protective, “Buy-Stop” order, strategy worked and protected me from having a Naked Call In-the-Money on a very hot stock.

Successful trading,

Steve

The Options Coach