Yesterday I sold 10 Naked contracts of RH Calls, you can read this trade at Sold 10 Call on RH. When I made that trade I placed a “Stop Limit” order to buy the shares. When I sold the Call the stock was at $51.05 and my Strike Price was $51.50. I put the “Stop Limit” order to buy the stock at $51.30. If the stock went down I would remain in a Naked Call position. If the stock went up to $51.30 I would automatically buy the 1000 shares to cover my Call. Late in the day the stock jumped up and closed at $51.75. While the stock was moving up and hit the $51.30 price, my broker bought the stock for me. Now I’m in a Covered Call position. When I made the trade I put on a Risk Factor 2 but now that I have a Covered Call, it is now a Risk Factor 1. Here’s the buy order:
Buy 1000 Shares RH @ $51.30
This RH Call expires tomorrow.
Steve
The Options Coach
Good thing you were able to scoop up the shares, this thing is insane today! 10% move. It just doesn’t seem to want to go down, every little dip is being bought by short covering IMO.
Good observation Dave! The reason I put the buy “Stop Limit” order on is because of the way the stock’s been moving. But, as you said, I’m glad it moved above my buy price while the market was open because the big move in the stock happened before the market opened today. Thank God! Have a great weekend!