I have a Covered Call on Facebook(FB). On previously own 1000 shares I sold 10 contracts of the $120 Calls to expire this Friday. I sold these Calls last Friday. With the market well into “May” mode, I don’t think I’ll get assigned on these shares by this Friday. Meaning I don’t think FB will get to $120 this week. With this in mind I just sold another Call to expire next Friday. I sold another 10 contracts of the FB 5/13/16 $120 Call and received a premium of $1.00 for a total of $1000. These Calls are Naked Calls until my Covered Call expires this Friday. If I am wrong and FB gets to $120 this week and I get assigned, I’ll buy another 1000 shares to cover my Calls expiring next Friday. At the moment these Calls are Naked but I feel good about this trade so I give it a Risk Factor of 3. Here’s the order for the 2nd set of Calls which are Naked at the moment.
Sell toOpen 10 FB 5/13/16 $120 C @ $1.00 (+$ 1000)
Please read my Message of the Day for May 2nd to get my feelings on what the market might do for the next few months.
Any questions please email me.
Steve
The Options Coach