It’s early Sunday and I just returned home from Boston. I love traveling and seeing other places but I love returning home to NYC. Plus the drive up 95 from NYC to Boston is not the most pleasurable one. Especially in damp cold weather.
I back at my desk writing my week ending results and doing a little research for the Monday open wish is the first market day or May. I’m never happy about the market in May, It’s normally a good month. For that matter neither is June and July. But the year normally opens better than it did in 2016 so I guess anything can happen. In anticipation of a normal May I will be prepared to do Naked Calls and possibly even short some stocks. Only time will tell.
I must say this year has been going fantastic for me. I had some great weeks. I did not have a great close to 2015 and the first few weeks of 2016 were rough but since than it’s been great. I’ve had some really unbelievable weekly gains. I was a little worried about this week with my 100 Naked contracts of U.S. Steel but it could not have ended better. I’m very happy!
I closed 3 trades this week. 1 was with AK Steel (AKS) which was a stock sale. 2 were with U.S. Steel (X), an expiration of an option and buying 10,000 shares of the stock and having them assigned. First let’s review AKS.
AK Steel
Last week on Thursday 4/21 I bought 5000 shares of AKS stock to cover a 50 contract Naked Call which was expiring Friday the 23rd. I bought for $4.95 per share. The stock went down and on Friday I never got assigned. The week ended with my option expiring but come Monday I was still holding the 5000 shares. No big deal but after AKS reported earnings on Tuesday of last week the premiums really dropped down. Since the stock was below where I bought and the premiums low, I was hoping for the stock to get above where I bought so I could get out. On Wednesday of this week the stock started up a little so I put in a sell order at $4.96. I bought the stock for $4.95. I really didn’t care about making money I just wanted out without losing money. I figured I’d add a penny to get out and get my commission paid. The stock hit $4.96 and I was executed. Last week I made $1000 on the Call I sold and this week I got completely out making 50 bucks. I am out without giving some of the premium back on the stock sale and I’m very happy. This deal is over!
Sell 5000 shares AKS @ $4.96
Profit +$50
U.S. Steel
On Wednesday the 27th I sold 100 Naked contracts of the U.S. Steel $19 Calls. I received a premium of $.25 for a total of $2500. With the stock selling in the area of $18.50, this was a nice premium of over 1.3% for a 2 day option. Here’s the option order:
Sell to Open 100 X 4/29/16 $19 C @ $.25 (+$2500)
On Friday the stock was above my $19 Strike Price. This had me very concerned because if it stayed there I would have to deliver 10,000 shares of stock at a price above my Strike. Friday was very volatile and the stock dropped below $19 to $18.70. At $18.70 I bought 5000 shares to cover half my position. The stock returned above $19 and stayed above for the rest of the day. Right before the close the stock pulled back to the $19.10 area. I figured, let me buy the other 5000 shares and cover my entire position. I ended up getting the shares at $19.11. I was completely covered and I had 10,000 shares at an average price of $18.90 so when I got assigned at $19 I made $.10 on the 10,000 shares for a profit of $1000. The market closed with the stock at $19.11, I was assigned at $19 and this deal is over. A great end to a week that could have ended a lot worse.
Expired 100 X 4/29/16 $19 C @ $.25
Profit +$2500
Assigned 10,000 shares X @ $19
Profit +$1000
Total weekly Profit +$3550
This money is in the Mattress
If you are trading, be very carful with May upon us. Many years I gave back my entire years profit in May. I hope this money I lost in past years was the cost of my education and I learned from it. Please take advantage of my mistakes and if you’re not trading, continue to not trading, and learn. At least until we see how May will go.
Steve
The Options Coach