Earlier today I bought 1000 shares of Square (SQ) at $62.80. In the email reporting that trade, “Bought 1000 shares of Square,” I wrote that I was hoping the stock would move 20¢ or 30¢ so I could get a premium I desired. I also wrote I was thinking of the strikes $63.50 or $64. Well, the stock went up 45¢ and I went with the $63.50 Strike Price. I received a $1 premium for $1000.
Sell to Open 10 SQ 1/10/20 $63.50 C @ $1.00 (+$1000)
Today is Friday and there has been military action in the Middle East. Who know’s how this will affect the markets over the weekend. I went with the lower Strike Price and the higher premium for this reason. I’m trying to ensure an assignment while I pocket the higher premium. If I get assigned I’ll make 70¢ on the stock sale for $700, in addition to the $1000 premium. This would be a $1700 gain on a 1 week trade.
The $1 premium on a $62.80 stock is a 1.6% return with the premium only. This fits into my “1 Week/1%” strategy. This trade is a Covered Call on a good stock so I give it a Risk Factor 1.
Successful trading,
Steve
The Options Coach