Earlier in the day I sold a 10 Contract Call on AMD with the Strike Price of $27 when the stock was $26.50. In the post reporting the sale of that Call I also mentioned that I placed a buy order with the price of $26.95. After I placed that order I had to go do some work for Fiore’s Pizza. Right before I left my home, with AMD continuing to go higher, I was filled on that order. I now have a 10 contract Covered Call on the stock. The risk Factor with my Naked Call was a 5, however, now that I’m in a Covered Call this position is now a Risk Factor 1.
Buy 1000 Shares AMD @ $26.95
If you have been reading my post you know I feel AMD will be pulling back a bit. The RSI is up above 80 and it’s in “over bought” territory. However, today the stock received an upgrade by Jefferies and it kept going up. If you read the page on RSI, Bob Bullock the writer, makes it very clear that when looking to get into a position, RSI is very important, buy do not rely on it’s information alone. Point being, I’ve been saying I feel the stock will have a pull back because of it’s RSI but there are other factors that can override the RSI like an upgrade by a respected company. Let’s watch and see what happens.
Steve
The Options Coach