Yesterday I sent out an email right at the close reporting trades with Canopy (CGC) and Micron (MU). I had to run out when the market closed so I didn’t have time to write this report.
On 1/13/20 I bought 1000 shares of MU at $57.50. I also sold a 10 contract Call bringing in a $600 premium. This Call was expiring at the close yesterday. At the close it was clear I wasn’t gonna get assigned with this Covered Call. My Strike Price was $58 and the stock closed at $57.66. With the market off Monday for MLK Day I wanted to get a jump on selling a new Call because after the weekend, with only 4 days in the week, the premiums would be a little lower. As the trading day was getting close to the closing on Friday I wanted to sell a Call but I wanted to wait until a few minutes before closing because MU was very close to my Strike Price. If I was gonna get assigned I won’t have sold a new Call. With a few minutes left to the day I felt confident the stock wouldn’t get above my Strike so I sold a new 10 contract Call at the close.
Sell to Open 10 MU 1/24/20 $58.50 C @ 55¢ (+$550)
Micron has been moving nicely so I went up on the Strike Price to $58.50. I figured let me take a little less of a premium and hopefully I’ll make a little more on the stock if assigned. I bought the stock at $57.50. If I get assigned I’ll make $1000 on the stock sale, in addition to my premium of $550. I think I’ll get assigned next Friday.
This Covered Call gets a Risk Factor 1.
On 1/14/20 I bought 1000 shares of Canopy (CGC) at $23.75. I also sold a 10 contract $24 Call for a great premium of $600. That’s a 2.5% return on the premium only. CGC moved up this week, as I hoped, and I was assigned. I made $250 on the stock sale and I keep the $600 premium and this deal is over.
I liked the way the stock moved this week so I wanted to do another Covered Call. This is not the best situation because CGC does not work on margin and I like to use the leverage of margin. I didn’t want to tie up the money with 1000 shares not on margin so I bought 500 shares and sold a 5 contract Call. last week’s CGC was well above my Strike but I waited until the last few minutes of the trading day to see where the stock was gonna go. I ended up buying 500 shares at $25 and selling a 5 contract $25.50 Call to expire next Friday. I only went up 50¢ on the Strike Price because I want to get assigned. I brought in a 60¢ premium for $300 on the 5 contracts.
Buy 500 Shares CGC @ $25.00
Sell to Open 5 CGC 1/24/20 $25.50 C @ $60¢ (+$300)
I don’t like this stock, and even though it’s a Covered Call I give this trade a Risk Factor 2. The little extra fear is that the stock pulls back and I get caught holding the stock for a while.
Watch for my week ending report. I had another great week!
Successful trading,
Steve
The Options Coach