Earlier today I was trying to execute a “Buy-Write” with Yelp. I wanted to buy 1000 shares of the stock and sell the $39.50 Call to expire this Friday the 9th. Well, it didn’t work out the way I wanted it to. A true “Buy-Write” is done on one trade but I usually do it with two separate trades. I bought the stock at the price I wanted but as soon as I had the stock it started moving down and I never got executed on the sale of the Call Option. I bought the stock at $39.35. Here’s the order:
Buy 1000 shares YELP @ $39.35
This is the problem of doing a “Buy-Write with two trades, sometimes the stock moves against you and you don’t get the Call sold. If you do it with one trade you enter the price you want the stock and the price you want the Call and they both get executed at the same time. But some people, like me, try to get the stock and hope the stock moves higher to get a better price for the option. Sometimes it works and sometimes it don’t! This time it didn’t! Now I bought the stock for $39.35 and it’s at $39.05, without getting the options sold. I’m really not worried. I like the way Yelp is moving and I hope to get the Call sold tomorrow. If I don’t get a good price for this Friday I’ll sell the Call for next Friday, the 16th. Stay tuned to see what happens tomorrow.
I have a lot of positions active right now. Check them out in my Active Positions. Right now everything looks pretty good.
Steve
The Options Coach