On 4/16/18 I bought 100 shares of Nvidia (NVDA) at $229.55. At that time I sold a 1 contract Call I called a Grasshopper Trade. It was an expensive Grasshopper Trade, but it was a 1 contract Covered Call. Today with NVDA up to $237.20 I sold another 1 contract Call. I received a $5.25 premium for $525 and the Call will expire next Friday. This is a high premium because it’s an earnings play. NVDA will announce earnings next Thursday, May 10th. The day before expiration. This is a Covered Call on previously owned stock so it gets a Risk Factor 1.
Sell to Open 1 NVDA 5/11/18 $245.00 C @ $5.25 (+$525)
Any questions on today’s trades send me an email.
Steve
The Options Coach
Hi steve, first I would like to thank you for setting up this blog to teach others! it’s inspiring. =) would like to ask if the recent NVDA trade is a slightly bullish trade on NVDA?
Hi Sabrina, thank you for the comment and question. And it’s a good question! When you sell a Call it’s a short position. Normally that’s considered a bearish move. However, I’m in this game for the premiums. Since earnings will be announced this week I felt the stock would go up, which it’s been doing. So I’m bullish on the stock but I’ll be happy with my gain if I’m assigned. I’ll make money with the premium, plus I’ll make money on the stock sale with assignment. I’d rather the stock go up and get assigned than have bad earnings and the stock go down and my money be lock up for a while. The bottom line is I’m bullish on this stock but I took the large premium just in case The Street don’t like the earnings report. The premium will offset the lose if the stock goes down.
If you have another question on this please send me an email.
Steve