Yesterday I sold a Call on U.S. Steel (X). I sold 100 contracts of the $20.50 Naked Calls expiring this Friday. I brought in a premium of $3000. When I sold the Call the stock was at $19.40. The stock went up to $20.18 and I bought 10,000 shares to cover the call. It went all the way up to $20.40 before it started coming down. When it was at $20.26 I sold the shares because I don’t want to hold this stock, I made $.08 on 10,000 shares ($800). Today the stock went down big along with everything else (welcome May). I’m so glad I sold the 10,000 shares, the stock hit a low of $18.46. In 24 hours the premium went from $.30 down to $.09 so I bought my way out to close the deal. I don’t think X will go up to my Strike Price of $20.50 by Friday but I’m sticking to my plan of putting money in my mattress. I decided to buy out for the $.09 ($900). I sold for $3000 and bought out for $900 for a profit of $2100 in one day. I’ll take it and look for another deal. This money is in my mattress! Here’s the buy order:
Buy to Close 100 X 5/6/16 $20.50 C @ $.09 (-$900)
Profit +$2100
When you’re selling Naked Call you never know what’s going to happen. Especially when its 100 contracts (10,000). The market can go up tomorrow and eat away at my profit. Maybe to the point that I have to buy the 10,000 shares to cover the Call. I’ll take the money and run!
Steve
The Options Coach
Congrats….kill it.
Allan Pizzoni, thanks for reading “Main Street beats Wall Street.”
Steve
The Options Coach