I’m very happy with the results of this week. There’s only one way it could have been better. And that’s if I was assigned on my RH shares. Most readers know when I do a Covered Call I want to get assigned. My assignment wish goes against the wishes of most options gurus. Most options gurus, when doing Covered Calls want to keep their stocks. I have a different train of thought. When I do a “Buy-Write” or a Covered Call I sign up for a premium and when I get into that trade, I pick a Strike Price I want to sell the stock for. If I get that premium and sell the stock at the price I wanted via assignment, I’m happy! If the stock goes up higher I don’t worry about it. This is called an Opportunity Lost. With all of my deals this week this is what happened, except RH. With RH I had a Strike Price of $70 (see below). Late in the week the stock was as high as $71.40. I was very happy I was gonna sell my 1500 shares at $70! But on Friday the stock dropped down and closed the week at $66.00. If I got assigned this deal would have been over with a nice profit. With the stock dropping down to $66, I have to sell another Call this week. If the stock continues down, I could be screwed. I’m hoping the stock rebounds and I get assigned next week. I really don’t feel comfortable owning stock. I’m an options trader. I only own stock to cover my position if needed. I would rather Naked Calls but the way stocks have been moving Naked Calls is not the best strategy right now.
Let’s take a look at the trades of the week including RH.
Micron
On Monday I bought 2000 shares of Micron (MU) at $30.08. On the same day I sold 20 contracts of the $30.50 Calls. The stock went up and I was assigned. I made 42¢ per share on the assignment of the 2000 shares, and the premium.
7/10/17 – Buy 2000 Shares MU @ $30.08
7/14/17 – Assigned 2000 Shares MU @ $30.50
Profit +$840
7/10/17 – Sell to Open 20 MU 7/14/17 $30.50 C @ 50¢ (+$1000)
7/14/17 – Expired 20 MU 7/14/17 $30.50 C
Profit +$1000
Weight Watchers
On Tuesday I bought 1000 shares of Weight Watchers (WTW) at $34.88. Also on Tuesday I sold a 10 contract $35 Call. The stock went up and I was assigned. I made 12¢ on the stock sale for $120 and I keep the premium.
7/11/17 – Buy 1000 Shares WTW @ $34.88
7/14/17 – Assigned 1000 Shares WTW @ $35.00
Profit +$120
7/11/17 – Sell to Open 10 WTW 7/14/17 $35.00 C @ 65¢ (+$650)
7/14/17 – Expired 10 WTW 7/14/17 $35.00 C
Profit +$650
RH
With the RH trade I had the stock from last week where I wasn’t assigned. On Wednesday I sold a 15 contract 3 day Call with a $70 Strike Price. As mentioned above the stock dropped back and I wasn’t assigned. I keep the premium and hope to sell another Call this week. I hope the stock jumps Monday so I get a better premium for a higher stock and the 5 day Call would be better than if I have to wait a few days to sell the Call. More time value will give me a better premium.
7/12/17 – Sell to Open 15 RH 7/14/17 $70 C @ 45¢ (+$675)
7/14/17 – Expired 15 RH 7/14/17 $70 C
Profit +$675
U S Steel
My U S Steel trade was a “Buy-Write” with a 1 day option. I bought the stock at $22.95 and sold the $23 Call. Made 5¢ on the stock and I keep a 42¢ premium. on 1000 shares that’s $50 on the stock and $420 on the premium. Not bad for a 1 day trade.
7/13/17 – Buy 1000 Shares X @ $22.95
7/14/17 – Assigned 1000 Shares X @ $23.00
Profit +$50
7/13/17 – Sell to Open 10 X 7/14/17 $23.00 C @ 42¢ (+$420)
7/14/17 – Expired 10 X 7/14/17 $23.00 C
Profit +$420
A very nice week! If I was assigned on RH it would have been a perfect week. Let’s watch RH tomorrow and see if I can get a nice Call sold. I would love to see the stock jump $2 or $3 in the morning. This will give me a very nice premium. If the stock goes down I’ll have to watch and see.
Total Weekly Gain +$3755
I hope you’re enjoying the week end. Today is a perfect day in NYC.
Steve
The Options Coach