I just completed a Covered Call with RH. Earlier today I sold a 10 contract Naked Call with the Strike Price of $82.When I sold the Call the stock was at $80. I felt the stock at $80 was near it’s top so I planned on holding the Naked Call while watching very closely. It turns out the stock took off fast and I didn’t get to buy the stock at a desired price. It went all the way up above my $82 Strike Price, very scary! The stock dropped down to $81 and I just bought the 1000 shares to make my Naked Call a Covered call. A lot less stress this way.
I received a premium of $1.25 for a total premium of $1250.
A Naked Call on this stock would get a Risk Factor 5+ but since I got it Covered it gets a Risk Factor 1.
RH Covered Call
Buy 1000 Shares RH @ $81
Sell to Open 10 RH 10/20/17 $82.00 C @ $1.25 (+$1250)
This is one wild stock. What was I thinking with a Naked Call?
Steve
The Options Coach
Thanks for the RH and AMAT tips. I got into both and profited handsomely.
In my case I could have made more $$ if I hadn’t sold the CCs but I try not to be greedy.
I did not get out of the RH CC so the shares were called away from me at close on Friday. Ring the cash register.
On RH by the time I read your first email the price had dropped. So I bought at 80.35. The $81 CC was $1.55
Thanks again
Congratulations Dick! Yes when doing Covered Calls you always have a chance of an “Opportunity Lost.” However, I believe in the long run you will do better with selling Calls and bringing in premiums. Right now the market is flying, but in normal times a stock might go down. If you don’t have the Call sold you’ll lose on the stock. With the Call sold you have the premium acting as insurance. If the stock goes down and lose value on the stock, you always keep the premium. Good luck, keep studying and be careful!
Steve