This week is going to be another great week to start 2017. Up until a few minutes ago I owned 5000 shares of U.S. Steel (X) and I had 2 Short Calls sold that were expiring today. 1 was a 50 contract $39.50 Call and the other was a 30 contract $41.40 Call. As I write I still have the 30 contract $41.50 Call which is Naked but the stock is at $39.25 so I think I’m safe with that Call expiring worthless at the close.
With this post I’m reporting ending my 50 contract Covered Call. Earlier the stock was going up and down, than it went up a bit which made me happy because I was in a Covered Call and I was hoping the stock would close above my Strike Price, I would be assigned at $39.50 and keep my entire premium. As the stock was going up I felt it was hitting resistance and I felt it would come down. When I had this feeling I sold the stock at $39.65 which was a dangerous move because it left me Naked on a Call which was 15¢ In-the-Money. At this point, I was hoping the stock would continue down below my Strike Price, and expire at the close. The stock did continue down and with the premium down to 10¢ I decided to “Buy to Close” and put my week to rest. With the stock still having the chance to get above my Strike Price I’m happy the deal is over. Yes it cost me $500 to close but I’m happy the deal is over with a nice profit, and I can start my weekend early.
I bought the stock at $39 and sold at $39.65, making a 65¢ profit. On the 5000 shares thats $3250. Here’s the buy and sell orders:
Buy 5000 Shares X @ $39
Sell 5000 Shares X @ $39.65
Profit +$3250
With the Short option I sold 50 contracts @ 42¢ and did a “Buy to Close” for 10¢. Here’s the sell and buy orders:
Sell to Open 50 X 2/17/17 $39.50 C @ 42¢ (+$2100)
Buy to Close 50 X 2/17/17 $39.50 C @ 10¢ (-$500)
Profit +$1600
As I’m finishing up this post U.S. Steel just went above the Strike Price I had. I hope the stock continues up. If it does I sell a 50 contract $40 Naked Call to start next week’s profit.
I would like to welcome the new readers. I see a lot of activity on the site. I am well aware I still have some unfinished pages and I will get to them soon. Been so busy coaching high school basketball! the season is over soon and I’ll get it all done. Plus I have plans for some new pages. Stay tuned!
Steve
The Options Coach
PS: I just put an order in to sell 50 contracts of the X 2/24/17 $40.50 Calls for 65¢