Gopro (GPRO) received a bunch of upgrades at the end of last week. I have my “Triple Play Hedge” still working but I’m on my last leg of the 3 Calls sold. This last leg expires this coming Friday. This is a $16 Call.
With the upgrades, GPRO is running strong today and the volume is very high. At noon the stock already traded over 16 million shares. With the stock at $16.05 I decided to sell another Call to expire this Friday. I own 5000 shares which is involved in my Triple Play. I purchased those shares at $14.40. With the stock at $16 as I write, I think there’s a good chance I’ll be assigned on these shares with the expiration of the last leg of my TriplePlay Hedge. Being concerned with the Fed meeting this week, I wanted to sell another Call for insurance just in case the market takes a dip after that meeting. The stock is up from where I bought so I wanted to try to hold on to that profit. The Call I sold today is a 50 contract GPRO 9/23/16 $17 Call which brought in a premium of $.40 for $2000. If the stock goes down I have $2000 worth of insurance and if it goes up i’ll have to cover the Call before it gets to $17. This is a Naked Call on a stock that’s moving on upgrades so I give this trade a Risk Factor of 4. I would have given this a 5 but it’s $1 Out-of-the-Money and it expires this week so I went with a 4, but I’ll be watching closely! Here’s the sell order:
Sell to Open 50 GPRO 9/23/16 $17 C @ $.40 (+$2000)
As I was writing the stock went down to $15.75 and the premium is down to $.20. Watch for an email, I might jump out with a profit today.
Steve
The Options Coach