Sold a Covered Call (PLTR) and 2 Naked Calls (SQ & MU)
The morning started quick, and busy. Both the DOW and the NASDAQ were up at the open but I didn’t think it would hold. I jumped in to 3 trades that I feel will work out nicely. All Short Calls to expire Friday. 1 Covered Call and 2 Naked Calls.
First let’s take a look at Palantir (PLTR). On 11/17 I bought 2000 shares at $18 per share. On 11/20 I bought another 2000 shares at $18.95. I now own 4000 shares at an average price of $18.47. This morning I sold 40 contracts of the 11/27/20 $19 Calls for a $1 premium for $4000.
Sell to Open 40 PLTR $11/27/20 $19.99 C @ $1.00 (+$4000)
As usual I hope to get assigned on this position. I sold the $19 Call for the better premium and a better chance to get assigned. I sold the Call with the stock at $18.50, as I write the stock is In-the-Money at $19.88. So far I’m looking good! This trade gets a Risk Factor 1.
Square opened today on a tear. As I write the stock is up over $9 and is above $205. After looking at the charts I decided to sell a Naked Call. The stock is at a high Relative Strength Index (RSI) and the stock just went above the top band of the Bollinger Bands. I do not think the stock will go much higher. With the stock in the $205 area I sold a $415 Call. I sold 10 SQ 11/27/20 $415 Calls for a premium of $1.80 for $1800.
Sell to Open 10 SQ 11/27/20 $415.00 C @ $1.80 (+$1800)
I feel safe with this Naked Call because it’s $10 Out-of-the-Money. The stock has to move another $10 before I get into trouble, and with Thanksgiving this is a shortened trading week. However, it is a hot stock so it gets a Risk Factor 3.
I love bringing in a premium with no investment! Just a little worrying!
The last trade to report is a Naked Call with Micron (MU). This trade was a ballsey move, and has me a little worried, but not too much! With the stock at $63.75 I sold a $64 Call. Remember, this is a hot stock. That’s why it gets a Risk Factor 5. I sold 10 MU 11/27/20 $64.00 C @ $1 for $1000.
Sell to Open 10 MU 11/27/20 $64.00 C @ $1.00 (+$1000)
Why did I make this trade? Well, I think MU is coming down. It’s well above a 70 RSI and the stock has been on a run. As I write the stock in In-the-Money at $64.25. I’m betting the stock will be below $64 by Friday. To tell you the truth, if it’s not I will not mind Shorting the stock. If the stock closes above my Strike Price, and I don’t cover, my broker will deliver the stock and I’ll be Short 1000 shares. If it closes above $64 I think it will be below $64 soon.
I wrote this report about 2 hours ago. I was almost done but I had to run to a doctor’s appointment. Just got home.
If you have any questions send me an email.
Successful trading,
Steve
The Options Coach