If you read my “Message of the Day” before todays opening you’ve seen we were looking for a good day. Right now the Dow is up over 200, the Nasdaq up 75 and the S&P up 30 and we have an hour to go before the close. I have 1500 shares of Facebook (FB) and it’s up 1.90. I put on an order to sell 15 contracts of the 3/18/16 $112 Calls a few hours ago and it just got executed. This will expire next Friday and I received a $.40 premium. On the 15 contracts the total premium is $600. When I got into FB I paid $111.50 for 1000 shares and $100.50 for 500 shares. If I get called out next Friday I’ll get $112 for all 1500 shares plus the $600 premium. This is another deal where I don’t care what happens. I could get assigned or not and I’ll be happy. I give this trade a Risk Factor of 1 because it’s a Covered Call and if I get assigned I make money on the stock and the premium. If the stock goes down, well, I own the stock anyway, if would go down wether I sold the Call or not. I figured I might as well take in the $600. I could have taken a larger premium with a lower Strike Price but FB has been moving nicely and I think it can blow through 110 or 111 by next Friday. If it goes to 112 I’ll be happy. Here’s the sell order:
Sell to Open 15 FB 3/18/16 $112 C @ $.40 (+$600)
If you have any questions on this trade email me. Have a great weekend!
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Steve
The Options Coach