Soon after the opening I did a “Buy-Write” with Advanced Micro Devices (AMD). For you Grasshoppers, a “Buy-Write” is a Covered Call where you buy the stock and sell a Call at the same time.
I bought 2000 shares of AMD at $11.98 and I sold 20 contracts of the AMD 6/16/17 $12 Calls for a premium of 25¢. On the 20 contracts the total premium is $500. This is a 3 day option. This trade fits into my “1 Week/1%” strategy, however, the sale of the Call gives me more than 1% and the trade is a 3 day option. It’s actually a 2% Rate of Return. I would like to see AMD go up and stay above my $12 Strike Price into Friday so it expires In-the-Money. If this happens I’ll get assigned, keep the premium and this deal would be over. Let’s see how it works out. This is a Covered Call on a very good stock so this trade gets a Risk Factor 1. Below see the 2 trades that make up the “Buy-Write.”
Buy 2000 Shares AMD @ $11.98
Sell to Open 20 AMD 6/16/17 $12 C @ 25¢ (+$500)
Steve
The Options Coach