I entered an order a little while ago but then I had to leave my computer to do some work at Fiore’s Pizza. I got home about 10 minutes before the close and my order was filled. The order I entered was a Buy-Write. Buy-Write is in the top menu bar under “Philosophy, Strategy & Risk“, hit the link and you’ll go to Covered Calls, scroll down and you will see Buy-Write. A Buy-Write is when you place an order to buy the stock and write a Call at the same time to make a Covered Call. Here’s the 2 orders that are involved in my Buy-Write:
Buy 5000 shares X @ $17.60
Sell to Open 50 X 7/8/16 $18 C @ $.31 (+$1550)
I give this Buy-Write trade a Risk Factor of 2. I already have another 50 contract Covered Call on U.S. Steel. I own 5000 shares at $14.95 and have a $15 Call sold against these shares expiring 7/15/16. I don’t like owning 10,000 shares of X so I put a Risk Factor a 2 and not a normal 1 for a Covered Call.
Any questions on Buy-Write send me an email.
Steve
The Options Coach