This week was slow when it comes to completed trades. I only had one! But it was a good one! If you are a “Main Street beats Wall Street” reader you know last Friday I did a Roll Out with Yelp. The “Roll Out” is a great adjustment trade strategy and I use it often. After the Roll Out I ended up with the following option: 50 contracts of the YELP 8/12/16 $34.50 Naked Calls. Right now the stock is at $32.28. On Monday August 1st the stock was in the area of $31.50.
Yelp’s earnings come out this Tuesday, August 9th. I will be hold this position through earnings. You know this does not make me happy! It just worked out this way because I had to do a Roll Out to prevent a losing trade. According to the option I sold, I have to deliver 5000 shares of yelp at $34.50 this coming Friday if the stock gets above that number. I think the earnings report will come out good and the stock will go up. Because of this feeling, I’m not comfortable holding this Naked Call with the earning report due out. As I mentioned above, earlier this week the stock was in the $31.50 area. When it got up to the $32 area I was going to buy 5000 shares to cover my Call. Before I pulled the trigger to buy the stock I looked at the Put premiums, and I liked them. Instead of buying the stock I decided to sell a Put with the Strike Price of $31.50 and possibly get paid (premium) for buying the stock at a lower price. I know I didn’t finish my page on Puts yet because I wanted to concentrate on teaching Calls, but it will be coming soon. The Put I sold said someone could sell me 5000 shares of Yelp at $31.50. If it went below that Strike Price before Friday the 5th I would have had those shares delivered to my account. This didn’t matter to me because I was going to buy the stock at $32. The stock never hit the $31.50 price and I never had to buy the stock. The stock is at $32.28 and my Strike Price is $34.50 so I still have plenty of room to cover my Call on this Monday. For the 50 contract Put I sold, I received a premium of $.50 for a total of $2500. This Put expired and this $2500 is in my mattress. Here’s the Put I sold:
Sell to Open 50 YELP 8/5/16 $31.50 P @ $.50 (+$2500)
Expired 50 YELP 8/5/16 $31.50 P
Total Profit +$2500
I know there is no information on Puts in “Main Street beats Wall Street” so if you have a question on this trade please email me.
Total Weekly Profit +$2500
I would like to welcome a few new readers who signed up this week. If you have any questions with anything I’m doing please send me an email. If you are a Grasshopper, study, study, study! There’s a lot of money to be made but if you do not educate yourself you can lose your life savings. FAST!
This site is not only about how to make money. It’s about education! Slow and steady, steady and slow. The tortoise wins the race! I know I joke about “money in the mattress.” I want to be enthusiastic and let you know what can be done, but it’s very difficult to do! But, if I can do it, you can do it! You must be carful, discipline and educated!
Have a great weekend!
Steve
The Options Coach