Sold 10 Contract Calls With Square & Peloton
I bought 1000 shares of Square (SQ) on 9/1 at $169. And I bought 1000 Shares of Peloton (PTON) on 10/2 at $107.75. Both of these stocks have done great! I have brought in a lot of premium money on both for a long time now.
Today there is some optimism in the market because of President Trump’s COVID treatment success and for a possible stimulus package soon.
I just sold Calls with SQ and PTON for really good premiums. I took a different approach with each trade. Let’s look at SQ first.
With the stock at $176.90 and up over $7 on the day. I sold an In-the-Money Call. I sold the $175 Call. I sold this Call for a few reasons. I’ll start with the Relative Strength Index (RSI). With the stock up so much this morning and the RSI above 70 I felt there could be a little pull back by the end of the week.
I know this is a hot stock, but with the election coming I would like to get assigned. Even though it could go higher if we get the stimulus.
This is an In-the-Money Call looking at today’s prices. The stock was at $176.90 and I sold the $175 Call. But remember, I bought the stock at $169. If assigned I make a lot of money on the stock sale.
Let’s take a look at the premium. For the $175 Strike Price I received a premium of $6.50. Yes, that’s $6500 for a 5 day option. If assigned this will be a huge gain for 1 trade.
Sell to Open 10 SQ 10/9/20 $175.00 C @ $6.50 (+$6500)
This trade gets a Risk Factor 1.
Next I have PTON. I bought the stock on Friday to cover a $108 Naked Call about to expire. The stock moved above my Strike Price late in the day and when it dropped to $107.75 I had to buy the shares to cover. It worked out that the stock closed below the $108 and the Call expired. I didn’t get a Call sold on Friday, so with the stock up today, I just got one sold.
This is another great trade! With the stock in the $109 area I sold the $109 Call. I received another great premium of $3.50 for $3500.
Sell to Open 10 PTON 10/9/20 $109.00 C @ $3.50 (+$3500)
This trade also gets a Risk Factor 1.
The different approach I took on these 2 trades is because SQ is up so much today. As I write it’s up over $8. Because of the desire to get assigned I went with the In-the-Money Call.
With PTON I went with the At-the-Money Call. This is a lower priced stock so if I don’t get assigned there’s less at risk. Plus PTON is a COVID stock. I think it has more potential, near term. PTON also has a higher Implied Volatility (IV). Being a COVID stock I feel it has better upside potential.
I already have big money coming in with premiums this week. Last week I sold a Call with NVDA that is expiring this Friday. Take a look at the 3 big premiums I have this week.
NVDA – $5200
SQ – $6500
PTON – $3500
These 3 trades alone is $15,200 in premiums. This is without assignment!
Successful trading,
Steve
The Options Coach