Did you see the news Elon Musk announced last night? Musk the CEO of Tesla Motors put in a offer to buy Solarcity (SCTY). Solarcity is a struggling solar company that installs solar panels on buildings for clean energy. Musk feel this is a perfect match for his struggling company but many analysts disagree. I really don’t know too much about this but I do see the analysts concerns. Because of the different concerns these stocks should be very volatile. As I write Tesla in down $19 (-8.7%) and SCTY is up $1.3 (+6.3%). Earlier SCTY was up over 10%.
While I was writing my Week Ending Report I put is an offer to sell 20 contracts of the SCTY 6/24/16 $22.50 Naked Calls trying to get a $.85 premium. While I was writing I was executed. Here’s the order:
Sell to Open 20 SCTY 6/24/16 $22.50 C @ $.85 (+$1700)
This is a very dangerous trade. Probably the most Risky! I give this trade a Risk Factor of 5. When I sold the $22.50 Call the stock was at about $23.15. The question is why did I do it? This is not a trade for anyone with a weak stomach. You must have risk tolerance!
Watching the stock from the open it was very volatile. It was up to $23.80 and down to $22.31. UP and down I watched it go. I decided to try to sell a Call when it was high and hope the stock went back down.
As I’m writing, the stock is down from it’s high and my premium that was $.85 is now $.47. I just put in an order to buy the Call back for $.45. LIVE TRADING!
I have to get back to my trading window, I’m having trouble concentrating. I hope I get executed to get out of this deal with a nice profit. I’ll let you know how it goes.
Steve
The Options Coach