Made only a few trades this week but I freed up some cash for the coming week.
I sold a Covered Call back on 5/28/19 with Advanced Micro Devices (AMD). This was a long term option with the Expiration Date going out to 1/17/20. This week I decided to do a “Buy to Close” to get out of that Call position. If I held the position until expiration I would have kept the entire premium of $2650. This week, with the crazy market volatility, thanks to the Trump tweets lol, AMD dropped down to where the premium was at $2.15. I sold the Call for $2.65 and I did the “Buy to Close” with the premium at $2.15 making a $500 profit. You must understand Short Positions.
5/28/19 – Sell to Open 10 AMD 1/17/20 $35.00 C @ $2.65 (+$2650)
8/27/20 – Buy to Close 10 AMD 1/17/19 $35.00 C @ $2.15 (-$2150)
Profit +$500
I was in the Call for almost 3 months but there was still 5 months before expiration. I had the opportunity to lock in $500, so I did. I figured if AMD continues back up I would get an opportunity to sell another Call. Well, AMD did go back up, and on Friday I sold another Call. The same Call as the first one. I received a premium of $2.70 for $2700.
Let’s review what I did. On 5/28 I sold a Call for a premium of $2.65 for $2650. On 8/27 I did a “Buy to Close” with the premium at $2.15. I paid back $2150 of the $2650 I brought in with the selling of the Call, for a $500 profit. On 8/30 I re-sold the same Call for $2.70 to bring in $2700. If I keep this option until expiration I’ll keep the entire $2700. If I do another “Buy to Close” we’ll have to see where the premium is to see how much I’ll make. Whatever I do I keep the $500 I locked in, and I will make more money, still to be determined.
This is a great example of making an adjustment trade to better my position.
On 7/30/19 I bought 1000 shares of Twitter (TWTR) for $42.90 per shares. Also on 7/30 I sold a Call bringing in a $530 premium. I did not get assigned so I also kept my stock. On 8/2 I sold another Call bringing in $900. Again, I wasn’t assigned so I kept the stock. On 8/20 I sold another Call bringing in a $600 premium. Again, I wasn’t assigned. Again, I keep my stock. At this point I bought the 1000 shares for $42,900 and sold 3 Calls for a total profit of $1730. The total profit would have been $2030 but the 2nd Call where I brought in $900, I did a “Buy to Close” and only kept $600 of the $900.
This week I got a little nervous with the TWTR’s candlestick chart. It’s in a “Wedge Pattern.” I cannot determine where I think the stock is gonna go. It could do a breakout to the north, but very possibly it could go down. I decided I didn’t want to be in TWTR any more, at least for the time being. The stock was below where I bought in so I didn’t want to just sell. And I couldn’t get a good premium for the Strike price I’ve been working with, $43. Remember, I bought at $42.90. In my past Calls if I got assigned at $43 I would have made 10¢ on the stock sale. At this point I couldn’t get a good premium for the $43 Call. I decided to go with a lower Strike Price for an OK premium, and if I got assigned I’d lose a little on the stock sale.
Since I had already brought is $1730 in premiums, and I wanted out of the stock, I sold a Call with a $42 Strike Price. If assigned I’d lose 90¢ on the stock for a $900 loss. This is actually what I wanted to happen. I just wanted out! With this $42 Call I sold I received a premium of 40¢ for another $400. Now my total premiums for all my TWTR Calls was up to $2130. I sold this Call knowing I had a good chance of being assigned, and I was.
8/26/19 – Sell to Open 10 TWTR 8/30/19 $42.00 C @ 40¢ (+$400)
8/30/19 – Expired 10 TWTR 8/30/19 $42.00 C
Profit +$400
I keep the $400 premium but I was assigned.
I bought the stock at $42.90 and was assigned at $42 with the Call above. I took a $900 lose on the stock but I’m out! Like I said, I’m a little nervous where TWTR might go. It could go up but I’m thinking down. We’ll see this week and I’ll report. Either way, I brought in a total of $2130 in premiums and lost $900 on the stock. On all the TWTR trades I’m up $1230. That’s 2.9% return on my $42,900 investment in 1 month. Not bad!
7/30/19 – Buy 1000 Shares TWTR @ $42.90
8/30/19 – Assigned 1000 Shares TWTR @ $42.00
Loss -$900
This week I made $500 with the AMD trade, $400 on the TWTR Call and a $900 loss on the TWTR assignment. This was an even week!
Total Weekly Gain $0
I now have the TWTR money available in my account. I would like to free up more with the selling of more of my holdings. Let’s see what I can do this week. Take a look at what I’m doing so far this year at Trade History 2019.
I hope you and a great Labor Day Weekend!
Steve
The Options Coach