Today I took calculated risk and sold a Naked Call on Advanced Micro Devices (AMD).
This afternoon I had to leave my office early. Before I did I wanted to make one more trade to possibly end the week. I looked at AMD, which was up, and I liked what I saw. The stock has been up almost every day for a week now, 8 out of 9 days. With the stock up again today I liked the way the candlesticks looked for a little backoff. It looked like it was hitting resistance. With the stock at $36.40 I decided to sell a 10 contract Call. I sold the $36.50 Call to expire this Friday and brought in a $520 premium. I was debating whether I wanted to buy the stock or go Naked. Going Naked would be a ballsey move but I felt strongly that the stock was gonna come down. I had to leave my office and didn’t even have time to write this report. I decided to stay Naked and I took off. I started watching the stocks on my phone in my car. It seemed like as soon as I sold the Call the stock started going higher. I was in my car and couldn’t do anything about it. The stock went all the way up over $37. Needless to say, I was pissed off.
I did some shopping and had to go to a meeting. The stock stayed up most of the day but right at the close it started pulling back. The stock backed off and closed at $36.15. I felt it was gonna do this, and I’m glad it did. I continue to have a Naked Call but now I have a little breathing room. I’ll watch closely to see what it will do in the morning.
Sell to Open 10 AMD 11/8/19 $36.50 C @ 52¢ (+$520)
This trade is a Naked Call on a very hot stock. This trade gets a Risk Factor 5. You can’t get much more risky than a Naked Call on a hot stock. Especially selling just about At-the-Money. I have a great feeling this trade is gonna work out great and I’m gonna have another big week.
I will be doing more Naked Calls soon in anticipation of a market pull back. Naked Calls are my favorite strategy but it’s been hard doing them lately with the “Trump Train” chugging along.
Take a look at my new Wealth Builder teaser page. I hope to have the new section ready by Dec 1st. I’ll give you one hint, Marvel Tech Group (MRVL) will be a part of it! I’ll be writing a report on what I think. Already I own a LEAPS out to 2022 and 1000 shares. I’ll be losing the shares this Friday to assignment. I will be buying more. This is one of the stocks I’ll be giving a strong buy rating. Do your homework and this stock will be making you a lot of money.
Any questions, send me an email.
Successful trading,
Steve
The Options Coach