Sold 50 Calls on my U. S. Steel

Risk1Good morning “Main Street beats Wall Street” readers. Today is Thursday and this is the first move I made this week. This might be the type of trade volume I’ll be doing if the market continues to move in a normal May fashion. Please go to the link “Message of the Day” and read my post from May 2nd. This “Message of the Day” explains how the market normally moves from May to November.

If you read my Week Ending 5/13/16 post you know I still own 5000 shares of U.S. Steel (X). X has been going down for the last few weeks on news that China is flooding the world with cheap steel. They are using the world, including the USA as a dumping ground to get rid of steel and selling it very cheap which is putting pressure on the steel market here at home. This week the U.S. Department of Commerce made it’s final determinations on anti-dumping investigations on imports of steel from China and Japan and concluded that both countries are selling these products in the American market below their fair value and therefore, are subject to anti-dumping duties.

The Department of Commerce, on Tuesday, imposed a hefty anti-dumping duty rate of 265% on imports of some steels. It’s about time the U.S. did something about this to help the companies here at home like U.S. Steel.

Who know if this will help the American steel industry but I think someone is listening to Donald Trump.

This morning I decided to do something with my falling U.S. Steel stock. I sold 50 contracts of Calls on my holding. The stock is down from where I bought so I went out 58 days with my Expiration Date. This Call will expire about a week and a half before X reports earnings on July 26th. With the stock at $13.20 I sold 50 contracts of the July 15 $15 Covered Calls and received a premium of $.90 ($4500). I bought the stock at $17.87 so this Rate of Return on my money invested is 5% in 2 months. We’ll have to watch to see how this plays out but I feel good about it being OK. I just hope the stock doesn’t continue down much lower. I give this trade a Risk Factor of 1. This is a low risk trade because it’s a Covered Call on a previously owned stock. Here’s the sell order:

Sell to Open 50 X 7/15/16 $15 C @ $.90 +$4500)

 

I’m also trying to get a Call sold on the 2000 shares of Facebook (FB) I’m holding. The stock is at $116.50. 1000 shares I bought at $113 and 1000 shares at $19.90. I’m waiting to get a decent premium with the Strike Price of $120. I’m not worried about FB! As soon as it goes up a little I’ll get a Call sold.

 

 

Steve

The Options Coach

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