This week I had two positions come to a conclusion. One with U.S. Steel (X) and the other with GoPro (GPRO). Actually the trade with X involved two trades on it’s own. Let’s continue and I’ll explain.
U.S. Steel
On Thursday, May 19th I sold 50 Naked contracts of the X. If you remember, nine days before this sale of the Call I wrote about X being in a “Raising Wedge” pattern in it’s candlestick chart. On May, 10th I wrote a post called “Where is U.S. Steel going.” The stock has been going up since February 24th and with this “Raising Wedge” coming to a point on May 9th and 10th, I felt the stock was going to go down for a little bit. With this prediction I was correct! At the end of the “Raising Wedge” the stock was at $19. Nine days later, on May 19th the stock was down to $13. It was falling like a rock! On May 19th, thinking it was going to continue down, I sold a Naked Call. With this prediction I was wrong. In fact I couldn’t have been more wrong. On May 19th the stock found support and started up on May 20th. The Call I sold was 50 Naked contracts of the X 7/15/16 $15 Call. This brought in a premium of $.90 ($4500). The stock was in the $13 area. The next day the stock started going up. By the end of May the stock was up to the Strike Price of $15. About four days later the stock was back down to $14. Afraid of buying the stock because I didn’t want to own 5000 shares in the case the stock went down, I stayed Naked! After the four days of the stock going down it reversed and went straight up. Not knowing what to do I stayed with my strategy and stayed Naked. The stock went as high as $18.50 and I had a little problem. In less than a month I have to delivery the stock at $15. Then came BREXIT! The stock fell with everything else and went down to $14.95. On June 27th I bought the 5000 shares at $14.95 to cover my $15 Call. This was a great move because the stock has been going up since and it closed Friday, July 15th (Expiration Day) at $21.68. The Call expired and I keep the $4500 premium. I covered the Call with the buying of the 5000 shares so I Delivered the shares at $15. Talk about an Opportunity Lost! The stock closed at $21.68 and I delivered at $15. The Opportunity Lost was $6.68. If I never sold the Call my profit on the stock would have been $33,400. WOW! You know how I feel about Opportunity Lost, I don’t worry about it. Plus this trade was just to cover a long time Call. I would have never only own the stock. I’m very happy I was able to cover the Call after the BREXIT vote. The final result is a profit of $4500 on the Call and $250 on the stock sale. A total of $4750. I’ll take it!
Profit +$4750
This is in my mattress, with a smile!
GoPro
On Monday, July 11th I sold a Naked Call on GPRO. When I sold it the stock was right around the $12 area. I sold 20 contracts of GPRO 7/15/16 $12 Call for a premium of $.32 ($640). This was a one week Call. The stock was moving above and below the Strike Price of $12 most of the week. Yesterday the stock went below the $12 mark and stayed below to the close. Near the close it was very close to the $12 mark so I covered with the purchase of the 2000 shares. I bought for $11.90. At the close I realized the stock was going to close below $12 so I sold another Call for next week. This was a great trade with a 2.6% one week return.
Profit +$640
Total Weekly Profit +$5390
Another great week! Some of the trades in the last few week were profitable because of adjustment trades. Knowing how to make adjustments in your trade is the most important part of option trading. Keep studying and email me any questions.
Have a nice weekend!
Steve
The Options Coach