Skechers “Triple Play Hedge”

Skechers (SKX) received an upgrade today. About 11am I entered 4 orders to do a “Triple Play Hedge.” 1 order was to buy 1000 shares of the stock and 3 orders were to sell Call Options. I just got executed on all 4 orders. I am well aware that an upgrade can cause a stock to go up and selling Calls is a short position. I like to sell Covered Calls on stock that, hopefully won’t go down. When doing Covered Calls I like to get assigned. If I get assigned I don’t lose money! I might have an opportunity lost, but I can live with that. When selling Naked Calls I want the stock to go down. In a “Triple Play Hedge” I don’t mind the stock to go up a little because I buy the stock and sell 3 Calls. The first Call is a Covered Call and the next two are Naked, but the Strike Price is out a little more than the first Call. If the stock goes down I have 3 Calls where the premiums act as insurance. If the stock goes up, the first Call is Covered, so I’m safe. If the stock continues up I buy more stock before the stock gets up to my second Strike Price. I love this strategy! Which I invented. As I write the Covered Call, which is the first Call in In-the-Money, the stock is at $27.10 and the Strike Price is $27. The next Call has the Strike Price of $27.50 and I have an order in to buy another 1000 shares if the stock gets up to $27.45. If it never gets up to that buy price, I stay Naked. Because the first Call is Covered and the second Call has a buy order in to buy the stock, I give this “Triple Play Hedge” trade a Risk Factor 2. I will watch closely to see if I have to put in a buy order to cover the third Call. Below you will see the 4 executed orders.

 Buy 1000 Shares SKX @ $26.90

 1st leg – Sell to Open 10 SKX 6/9/17 $27 C @ 45¢ (+$450)

 2nd leg – Sell to Open 10 SKX 6/16/17 $27.50 C @ 50¢ (+$500)

3rd leg –  Sell to Open 10 SKX 6/23/17 $28 C @ 55¢ (+$550)

If you are interested in what I’m doing you must learn what a “Triple Play Hedge” is and the reason for it. Go to the page and make sure you understand. If not, send me an email.

With this trade I bought 1000 shares of SKX at $26.90. The shares cost me $26,900. I brought in a total of $1500 in premiums. This deal, if it goes the way I want, will have a Rate of Return of 5.5% in 19 days. That is a little less than 3 weeks! This is the type of trade I love. If you’re looking for more your risk goes way up. You better have a lot of capital to lose and you better have a very high risk tolerance. I wouldn’t listen to these stock gurus on FaceBook that say they’ll get you 20, 30, and 40% a week. They want to lie to you to make it sound great so you sign up for a subscription. I’ll never know why someone making so much money needs your subscription money. I make my money doing what I preach. I don’t need money from you. I want to help you make your own money while I’m making mine. Even being careful the way I trade is very difficult to be successful. You must be careful and very disciplined. Sometimes I wonder why I do this site because I know how hard it is. I would hate to see anyone lose money. Main Street beats Wall Street is for someone who wants to trade and is gonna get into it no matter what I say. I want to help prevent you from losing hard earned money. And tell the truth while others are lying to you.

Let’s watch this “Triple Play Hedge” and see how I do. The one I did last week is doing well. The first leg expired and I was assigned on the shares. I covered the second leg.

Steve

The Options Coach