Nvidia Covered Call, Snap Naked Call

I started the week with 2 trades I feel will work out well.

On 9/1 I bought 1000 shares of Nvidia (NVDA) at $553.85 and have been selling Covered Calls and bringing in great premiums since.

Last week the stock pulled back a little but today popped just enough for me to get a nice Call sold. I sold 10 NVDA $555 Calls to expire this Friday. I got another big premium of $6.50 for $6500.

Sell to Open 10 NVDA 10/30/20 $555.00 C @ $6.50 (+$6500)

I have been selling the $560 or the $565 Calls, but with the pull back, and the desire to get assigned before the election, this time I sold the $555 Call.

This trade is a Covered Call on previously owned stock so it gets a Risk Factor 1.

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Let’s take a look at Snap (SNAP). The stock has been on a big run after earnings. It’s still losing money but the loss is less. They also had an increase in users.

I’m not a big fan of SNAP! However, over the weekend I was looking at the charts to see if money could be made. Looking at the amount the stock went up last week I wanted to look at the Relative Strength Index (RSI). I noticed it was up near 93. This is extremely high, and the highest ever for snap.

I planned on looking at SNAP first thing this morning. On a down day, SNAP opened up about 50¢. I did not think it would continue up. With the RSI at 93 the stock is extremely overbought. With the stock close to $44 I was thinking of Shorting the stock but decided on selling a Naked Call. I sold 10 contracts of the SNAP $46 Calls to expire Friday. I received a premium of 80¢ for $800.

Sell to Open 10 SNAP 10/30/20 $46.00 C @ 80¢ (+$800)

SNAP is a hot stock right now and a Naked Call would normally get a Risk Factor 5 but with this RSI level I’ll put a Risk Factor 3. But I’ll watch closely. As I write the stock is down $1 and is getting close to $42.

Successful trading,

Steve

The Options Coach