The market has been moving pretty well the last week or so. Oil is up and it looks like we’re in a little rally. I’m not sure if I trust it but NFLX is up $2.60 right now so I just sold 10 contracts to take advantage of the higher premium. I really don’t want to get called out of my shares because I bought the shares for $115 and I sold the $95 Calls. I’m hoping the stock does not hit $95 by Friday. If it does , no biggie, I’ll buy the shares back and hold the stock until it goes to my purchase price of $115. I sold the 5 day option and got a premium of $1. On the 10 contracts the total premium is $1000. here’s the order:
Sell to Open 10 NFLX 2/26/16 $95 C @ $1
I gave this trade a Risk Factor of 2. A Covered Call would normally be a 1 but there is a good chance of getting assigned. I bought the stock at $115 and it’s way down from there. If I get assigned at 95 and the stock is at 96 or 97 I would be selling my stock at $95. I do not want this to happen because I want to hold the stock until it gets to my purchase price so I don’t lose money on the stock. Either way I keep my $1000 premium. I guess I don’t trust this rally and I feel NFLX will not hit $95. Let’s watch and see.
Hit the link below. It will bring you to the “Stock/Option Glossary.”
Steve
The Options Coach