Buy 1000 Shares of PTON to Cover My Naked Call

On 9/25 I sold 10 contracts of the PTON 10/2/20 $96 Calls. This was a Naked Call that gave me a $3 premium for $3000.

This morning with everything up, Peloton is down. With the stock at $96 I placed an order to buy 1000 shares at $95. The stock was fluctuating very quickly between $95.50 and $96.50. I took the shot at $95 and the stock did drop while fluctuating and I was filled at $95. I now have a 10 contract 10/2/20 $96 Covered Call where I bought the stock at $95. At this point I love this position.

Buy 1000 Shares PTON @ $95.00

This trade now is a Risk Factor 1. If I get assigned this Friday this Covered Call gives me a $4000 return. A $3000 premium and $1000 profit on the stock sale. If I don’t get assigned I keep the $3000 premium and keep the 1000 shares of a hot stock.

Successful trading,

Steve

The Options Coach