Another wild week! The week started down, but the 2nd half of the week was great. I also have a few trades to report.
At the high on Monday the DOW was at 26,655, the low on Tuesday was 26,139. The difference in the high on Monday and the low on Tuesday was over 500 points. Then Wednesday came and the market started moving up; which continued until the close on Friday. With about 15 minutes until the close of the week the DOW was at it’s week’s high, 27,013. In the last 15 minutes before the close the market dropped going into the weekend and close up 319 on the day, at 26,816. The big news that caused the late week rally was the U.S/China trade talks.
I, personally, had a very busy Friday and Saturday. On Friday, I knew the market was up but I really didn’t get to enjoy it at my computer. I had to leave my house early. I had to leave NY to head to Long Beach Island, NJ. My friends and I lost a very good friend a few months ago and we were having a little memorial celebration to scatter his ashes in the ocean. Long Beach Island is a place he loved be and going fishing.
I got home about midnight and had to get up and attend the Christening of my niece’s son. I had to be in the Pocono Mts. by 10:30am Saturday morning.
It is now Sunday afternoon and I’m catching up on Main Street beats Wall Street.
Before I left my house to go to Long Beach Island on Friday morning, I placed an order to sell a 1 contract Call on my 100 shares of Nvidia (NVDA). I bought the shares at $185.70 and I thought it was time to free up that money. With the stock at $187 and change, I placed an order to sell 1 contract of the 10/18/19 $190 Call. I entered the order with the premium of $3.50. When I was on the road that order was filled. The market was moving up and I believe the stock was at about $188 when I was filled. I was busy all day so I didn’t get to report the trade when I was filled.
Sell to Open 1 NVDA 10/18/19 $190.00 C @ $3.50 (+$350)
If I get assigned I’ll get $190 for my 100 shares ($19,000) and I’ll keep the $350 premium. If I don’t get assigned I keep my stock and the $350 premium. This trade is a Covered Call with previously owned stock so it gets a Risk Factor 1.
After the scattering of our good friend’s ashes we had a little coalition at a friend’s beach house. We enjoyed great food, libations, and told many stories of our missed friend. At about 3:45pm I got a chance to open my computer to see how the market was doing, and to see if there was anything I wanted to do before the close. A few Main Street beats Wall Streetreaders were in attendance and I was even able to give a short stock option’s lesson lol. With the market winding down for the week it was clear I wasn’t gonna get assigned on my Advanced Micro Devices (AMD) Call. The Call about to expire was a $30 Call. With a few minutes until the close, and the stock at $29.75, I decided to sell another Call to start the next week’s income. I sold another 10 contract 11/18/19 $30 Call and received a premium of 60¢, for $600. That’s a great premium for a 1 week option on AMD, it’s 2%.
Sell to Open AMD 10 11/18/19 $30.00 C @ 60¢ (+$600)
This trade also gets a Risk Factor 1, for the same reason as the NVDA trade.
Ok, now that I reported the trade I made let’s take a look at how I did last week. I had 2 Calls expire without getting assigned. 1 with AMD and the other with Square (SQ).
Advanced Micro Devices
I sold a 10 contract $30 Naked Call. When I was filled on the trade the stock was at $28.85. To protect myself I placed a Buy-Stop Order at $29.35. This meant if the stock got up to my buy price of $29.35 the stock would be bought and my Naked Call would be Covered. The stock did get up to $29.35 and I now owned the 1000 shares. On Friday the stock closed below my Strike Price of $30. My Call expired. I keep my stock, and I keep the $300 premium.
10/4/19 – Sell to Open 10 AMD 10/11/19 $30.00 C @ 30¢ (+$300)
10/11/19 – Expired 10 AMD 10/11/19 $30.00 C
Profit +$300
Square
On 9/30/19 I did a Covered Call with SQ. The Call brought in a premium of $700. That Call expired and I wasn’t assigned. On 10/4 I sold another Call to expire this past Friday. This was a same $30 Strike Price, but this Call gave me a premium of $1050. Again, I was not assigned, I keep the $1050 premium and I keep the stock.
10/4/19 – Sell to Open 10 SQ 10/11/19 $63.00 C @ $1.05 (+$1050)
10/11/19 – Expired 10 SQ 10/11/19 $63.00 C
Profit +$1050
I’m hoping to get another Call sold this week.
Total Weekly Gain +$1350
Let’s hope the talks between the U.S. and China continue well and the market continues to move up.
Enjoy your 3 day weekend!
Steve
The Options Coach