I already have 1000 Shares of Micron (MU) which is unattached to an option. In addition to these shares I just did a 10 contract Buy-Write with the same stock. Micron has been moving very nicely the last few weeks and I think it will continue. With this new position I’m looking to get assigned. I want the stock to continue up so my stand alone 1000 shares will increase in value. And if the stock goes up above my Strike Price of this Buy-Write I’ll get assigned. With this Buy-Write I bought 1000 shares at $35.80 and sold 10 contracts of the MU 9/22/17 $36 Calls for a premium of 42¢ ($420). For this Friday, I’m looking for MU to go above my Strike of $36. If this happens, I make money on my stand alone 1000 shares, plus with assignment on my Buy-Write, I keep the premium of $420 and make 20¢ ($200) on the stock sale. The Buy-Write will give me a gain of $620 in a few days. Getting a 42¢ premium on a $ stock 35.80 fits into my “1 Week/1%” strategy. Its a 1.1% Rate of Return. If I get assigned it will be a 1.7% gain. This is a Covered Call so this trade gets a Risk Factor 1.
Micron Buy-Write
9/19/17 – Buy 1000 Shares MU @ $35.80
9/19/17 – Sell to Open 10 MU 9/22/17 $36 @ 42¢ (+$420)
Steve
The Options coach