Yesterday I sold a 30 contract Call on U.S. Steel (X). This Call was to expire next Friday, the 24th. I normally sell Calls to expire in the present week. However, I made all the trades I wanted to this week, which satisfied my weekly goal in my “2017 Challenge” so with plenty of margin buying power left I sold this Call to start on my goals for next week.
I sold this 30 contract Naked Call with the premium of 80¢ for a total premium of $2400 on the 3000 shares. This morning X started the trading day down. Then it went back up and back down again. When the stock was down the premium was at 40¢ and moving down. When it got to 38¢ I decided to “Buy to Close” my position. When I sold the Short Call yesterday for 80¢ I brought in $2400. Today I paid 38¢ ($1140) to close the position and this deals is over! I closed the 1 day deal with a profit of $1260. This gave me a Rate of Return of 1% in 1 day. I love it! Below are the “Sell to Open” and “Buy to Close” orders:
Sell to Open 30 X 2/24/17 $41.50 C @ 80¢ (+$2400)
Buy to Close 30 X 22/24/17 $41.50 C @ 38¢ (-$1140)
Profit +$1260
Today is only Thursday. With X being so volatile, I’m hoping the stock goes higher today or tomorrow and I’m able to sell another Call to expire next week. As the stock goes higher, the premium will go higher!
It’s very important to understand how a Short position works. Make sure you read my Long and Short Positions.
Also read Rate of Return to see what I look for with each trade.
I would like to welcome the new readers. Email me any questions or comments.
Steve
The Options Coach