Earlier in the week I sold Calls against my 10,000 shares of U.S. Steel (X). I sold (2) 50 contract Calls when the stock was up a bit. The stock didn’t stay up at the price where I sold the Calls and I was able to “Buy to Close” both Calls locking in some nice profit. This happened on Tuesday! I did the “Buy to Close” with the hopes that X would return back up to sell another Call before the week was out. Today the stock opened up and before 10am the stock was up over a $1. As it was going up I was able to sell another 100 contracts of the $36 Calls expiring tomorrow. I brought in a premium of 25¢ for a $2500 premium. This is a Call on previous owned shares of U.S. Steel so I give this Covered Call a Risk Factor 1. Here’s the order:
Sell to Open 100 X 2/10/17 $36 C @ 25¢ (+$2500)
You might ask why I sold a Short Call on a stock moving up. Why not just hold the stock and take the gains on the stock and not put yourself in a position where you might have an Opportunity Lost? Well that would be a great question! However, I’m in this game to bring in premiums. Plus I’ve been watching this stock a long time and I don’t know how much higher it can go. As you know I don’t like owning 10,000 shares and I would like to get assigned on my shares, take the profit and work with less shares if I decide to continue selling Calls on this stock. I would have to decide if I wanted to continue working with Covered Calls or move to Naked Calls if I feel it is hitting resistance. I will be watching U.S. Steel very closely!
If I get assigned and out of these shares watch for my “2017 Challenge.” It’s printed and ready to be published. I’m just waiting to get out of at least half of this position of 10,000 shares.
Steve
The Options Coach