Yesterday I was driving on my way to Boston and looking for a last deal that would expire this Friday. My computer’s battery was getting weak but I got this trade in before my computer died. I hope it wasn’t a mistake! I didn’t get a chance to post the trade so here it is.
I bought 1000 shares of Twitter (TWTR) when the stock was at $42.90. The stock has been doing well and I only wanted to make 10¢ on an assignment. A little while later I received a 53¢ premium for selling 10 contracts of the TWTR 8/2/19 $43 Call. The total premium was $530.
Buy 1000 Shares TWTR @ $42.90
Sell to Open 10 TWTR 8/2/19 $43.00 C @ 53¢ (+$530)
Right after I made these 2 trades the market started to tank on the Fed’s comments. Everything went down! This is the problem with Covered Calls. And why I like to get assigned. If the stock goes down below where you bought you might have to hold the position for a while. Most times I love to get assigned. Get out of the entire Covered Call and move on to the next deal with the cash. TWTR did drop down below $42 but bounced back and closed at $42.31. I hope the stock comes completely back to my purchase price and goes above my Strike Price by tomorrow’s close. I think there’s a good chance of this happening but I don’t think that will happen with my Micron or Applied Material Covered Calls. Next week will be a very interesting week.
Steve
The Options Coach