I have not done a “Buy-Write” in a while but basically it’s a Covered Call where you buy the stock and sell a Call Option at the same time.
I’ve had Dick’s Sporting Goods (DKS) on my watch list for a while now. Today looking for a nice deal to satisfy my “2017 Challenge“, I liked the way DKS looked. I got in the stock at $52.40 and sold the $52.50 Covered Call expiring this Friday. Since I was executed a few minutes ago the stock moved up to $52.70 while I’m writing. I would love for the stock to stay above the Strike Price of $52.50 until Friday, get assigned, and move on. This is a Covered Call on a good company with a few “buy” ratings on it so this trade gets a Risk Factor 1. Below are the 2 components of the “Buy-Write.”
Dick’s Sporting Goods “Buy-Write”
Buy 1000 shares DKS @ $52.40
Sell to Open 10 DKS 2/17/17 $52.50 C @ 70¢ (+$700)
If you have any questions on how a “Buy-Write” works, send me an email.
Steve
The Options Coach