This morning I got out of my Micron (MU) Naked Calls and I bought more Netflix (NFLX) LEAPS.
Micron has been on a crazy run for a few weeks. Yesterday it looked like it was hitting resistance at $45. And to me it looked like there would be some profit taking. With the stock at $44.45, and having a strong feeling the stock would back off, I decided to sell a Naked Call. It’s a dangerous move on a hot stock but I felt good about my prediction. I sold 10 Naked Calls for 47¢ for $470. These Calls were to expire this Friday.
Today, as expected, the stock opened down. I saw an opportunity to get out with a 1 day profit so I placed a “Buy to Close” at 17¢. A little while later I was filled, and this deal is over! Grasshoppers, you must understand Short Positions. I sold for $470 and I bought my way out for $170 for a profit of $300. I love taking profit! These are the type of deals you find when you get knowledgable with options and put in the time.
7/15/19 – Sell to Open 10 MU 7/19/19 $45.00 C @ $47¢ (+$470)
7/16/19 – Buy to Close 10 MU 7/19/19 $45.00 C @ 17¢ (-$170)
Profit +$300
When I’m involved in Naked options I like to get out if there is a good opportunity. If I sell a 1 week Naked Call and have the opportunity to get out with half my premium in 1 day, I do. Naked Calls are dangerous! You never know what will happen in the next few days. Here I signed up for a $470 premium and I was able to get out in 1 day with a $300 profit. I’ll take that and stick it in my mattress! Any time! This deal is closed!
On 6/27 I bought 3 NFLX LEAPS. On 7/11 I noticed a reversal pattern on the candlestick chart. You normally get into LEAPS to own for a while. Me being a “Swing Trader,” and seeing this reversal pattern, I decided to temporarily jump out which gave me a $1200 profit. Read my post reporting my exit at Out of My Netflix LEAPS. You will see the reversal pattern.
When I exited that position on 7/11 the stock immediately headed south. The next day it was down $6. And it’s been going down since. This morning the stock was up a little and I felt the pull back was over. With the stock at $368.10 I bought 5 of the same LEAPS I sold on the 11th. Originally I bought 3 of these Calls for $44.50 and sold them at $48.50 making $1200. Today I bought 5 of the same Calls for $42.60. As I write the stock is up about $1.50. Who knows how long I’ll be in these? I plan on staying a while but things change. If I see another nice profit in a short amount of time I might exit again.
Buy 5 NFLX 6/19/20 $400.00 C @ $42.60 ($21,300)
This is a long term option but buying options never feels completely safe. Here I feel confidant this position will turn out well. I give this trade a Risk Factor 2.
This option has a Delta of .50. My premium will move 50¢ for every $1 move in the stock. So my investment will go up as if I had 250 shares of NFLX. I invested $21.300. If I bought 250 shares of NFLX it would have cost my $92,025. I love leveraging my money with options!
Any question? Send an email.
Steve
The Options Coach