Good morning Main Street beats Wall Street readers. I hope you all had a great weekend. It’s 10:00am Monday morning and I’m back to work. On this past Thursday, July 14th I sold 50 Naked contracts of AK Steel (AKS). Please hit the link and read this very short post. The post is 50 AK Steel Calls. I sold the 50 contracts and brought in $.16 for a total of $800. This is a one week Call and I put a Risk Factor of 4 on the trade. On Friday the stock had some good news come out and the stock went above my Strike Price, which concerned me a little because it’s Naked. Today a little more good news came out but the market’s down a little. The stock went up to $5.61 but because the market’s down it came back down to below the $5.50 Strike Price. I decided to buy the 5000 shares to cover my position. I got the stock for $5.48. Now that I’m covered I change my Risk Factor from 4 down to 1. I now have a Covered Call. Now I hope the stock stays above $5.50 and on Friday I get assigned. Here’s the buy order:
Buy 5000 shares AKS @ $5.48
I’ve been watching the steel stock and they have been moving up as of late. I like AK Steel (AKS) a little better then U.S. Steel (X). The Commerce Dept. said the heavy “duties” put on China’s imports of cold rolled steel and rolled stainless steel are working to curtail the imports, and AKS is one of the largest dealers in the USA of these products. Rolled steel orders are up in the USA by the car manufactures, in addition to other industries.
I normally don’t like owning these stocks, especially 5000 shares but because of these facts I mentioned I’m not too concerned about AKS taking a big drop. At least not in the next week.
AKS earnings will be announced on July 26th. This position I’m holding should be over on Friday the 22nd. If the stock drops below the Strike Price and I don’t get assigned, I’ll be holding 5000 shares thru earnings. I hope to get assigned!
Steve
The Options Coach