Yesterday I mentioned U S Steel moved big while I had an order in to do a Buy-Write. It jumped over $1 within minutes of my order getting executed and the stock continued up. The trade was executed right in the beginning of the big move so I’m In-the-Money. Shares of U.S. steel and the entire steel industry jumped in afternoon trading after President Trump said he is considering using quotas and tariffs to deal with steel dumping from China and other countries.
This news did not hurt my position. I entered a “Buy-Write” and both my positions were executed, so my Short Call is protected because I own the shares of the stock; It’s a Covered Call. However, If I entered the trade as 2 separate trades with the buying of the stock first then selling the Call as the stock went up a little for a better premium, I never would have entered the selling of the Call position as the stock was moving. I would have benefited for the stock gain. No big deal! I’m in the options business. I’ll be keeping the premium ($420) and make a few bucks on the stock ($50).
You can see that trade at Another U S Steel “Buy-Write”.
If you have any questions on this trade and how I would have made more money if I held off on the selling of the Call, send me an email.
Steve
The Options Coach