If you read “Main Street beats Wall Street” and keep up with my trades you saw I sold 100 contracts of X with the Strike Price of $20.50 on Monday. You also saw that I bought my way out of that position yesterday with a profit of $2100. Well, today X had a little pop and the premiums went up a bit. When I got out of that position the premium was $.09, but today, with the same Strike Price and Expiration Date I just sold 50 contracts for $.25. I sold 50 contracts of the 5/6/16 $20.50 Naked Calls for the $.25 for a total of $1250. I didn’t do 100 contracts because that was a little scary! The stock has been very volatile so I played it a little safe to finish the week. This trade is a Naked Call but it’s still over a dollar from my Strike so I gave it a Risk Factor of 4. If it was closer to the Strike it would have gotten a 5. Here’s the order:
Sell to Open 50 X 5/6/16 $20.50 C @ $.25 (+$1250)
As I wrote this U.S. Steel came back down, in my favor, to $18.70. I might end up buying my way out of this position before you read this.
Steve
The Options Coach