50 AK Steel Calls

I’ve been watching the steel companies closely for a while now. I feel like they are hitting a little resistance in the last few days. With AK Steel (AKS) hitting a 52week high ($5.50) today then pulling back to the $5.30 area I sold 50 contracts of the $5.50 Naked Calls expiring next Friday. I brought in a premium of $.16 ($800). This is a one week option for a 3% Rate of Return. With the stock about $.20 Out-of-the-Money, I’ll be watching closely. I hope it stays below $5.50 but if I have to, I’ll cover by purchasing 5000 shares. At the moment it’s a Naked Call  but $.20 Out-of-the-Money so I give it a Risk Factor of 4. Here’s the order:

Sell to Open 50 AKS 7/22/16 $5.50 C @ $.16 (+$800)

Steve

The Options Coach