I wrote a post last week about LEAPS and that I sold a 20 contract LEAP on Advanced Micro Devices (AMD). On 9/11/17 I bought 1000 Shares of Micron (MU) at $32.85. The stock has been moving up ever since on great reports and received a target price of $40. As I write the stock is up 3% today and it’s at $35.70. With the big move since I bought and the great reports, I don’t plan on selling. With this good outlook I just sold a 10 contract LEAP option. This option expires on 1/19/18. Since I don’t plan on selling and a $40 price target, I sold the $40 Call. Whatever happens I think this will end good. If the stock goes up to the point where I get assigned I’ll have a nice profit on the stock, $7.15 on the 1000 Shares. Plus the $1700 premium. That would be a 30% gain since I bought the stock on 9/11/17. If the price of the stock blows thru the Strike Price and I get assigned, I make the same. If the stock stays below the Strike Price and I don’t get assigned, I keep the premium and I keep the stock where ever it is. It’s a great stock and I don’t see it going too low, and if it did, staying low. This is a great strategy for a trader who doesn’t have the time to sit at the computer all day, ever day.
Covered Call LEAP
9/11/17 – Buy 1000 MU @ $32.85
9/18/17 – Sell to Open 10 MU 1/19/18 $40.00 C @ $1.70 (+$1700)
This is a Covered Call on previously own stock, a very good stock, so this trade gets a Risk Factor 1. Let’s watch and see how this plays out.
Steve
The Options Coach