The coronavirus cases continues to grow and the market volatility continues to raise. I normally like market volatility because it causes option’s premiums to go up, and as an option’s trader, more specifically an options seller, higher premiums are a good thing. And it’s not that the volatility is so high, it’s the market is so unpredictable. One day the DOW is up 400 points and the next it’s down 400 points. Last week I made trades after a 500 point down day thinking the virus was about to reek havoc, and the next day started a 3 day 600 point up move. These trades caused me to have my 1st losing week in a long time.
As I said before, this is not the time to learn how to trade options with actually trades, however, it’s a great time to learn how market movement effects premium values. I think Grasshoppers should take this time to paper trade, watch the market closely and continue to study.
This week I made 3 trades where the stock went well below my buy-in price. Thinking the virus was gonna keep them down and in each trade I used a Strike Price where I didn’t want to get assigned. These stocks were Canopy (CGC), Micron (MU) and Weight Watchers (WW). 2 out of the 3 stocks went above my Strike Price leaving me in a losing situation; I was gonna be assigned at a price lower than my buy-in price. I didn’t want to lose my stock at a large loss and I didn’t want to do Roll Outs. I decided to “Buy to Close” the positions at a loss and keep my stock. On MU I lost $1400 and with WW I lost $550. The sole position that worked out the way I predicted was CGC. I kept the premium and kept the stock.
I’ll take the losses and move on. Below are the trades of the week.
With DISH I continue to bail out of my 10 long contracts. This week I sold 2 of them.
9/16/19 – Buy to Open 2 DISH 6/19/20 $35.00 C @ $6.30 ($1260)
2/3/20 – Sell to Close 2 DISH 6/19/20 $35.00 C @ $5.00 ($1000)
Loss – $260
I sold 2 Calls on my Apple shares and was not assigned.
1/31/20 – Sell to Open 2 AAPL 2/7/20 $325.00 C @ $2.50 (+$500)
2/7/20 – Expired 2 AAPL 2/7/20 $325.00 C
Profit +$500
This is the Canopy trade.
2/3/20 – Sell to Open 5 CGC 2/7/20 $23.50 C @ 50¢ (+$250)
2/7/20 – Expired 5 CGC $23.50 C
Profit +$250
This is the Micron trade. I did the Buy to Close so I still own the stock.
2/3/20 – Sell to Open 10 MU 2/7/20 $55.00 C @ 50¢ (+$500)
2/7/20 – Buy to Close 10 MU 2/7/20 $55.00 C @ $1.90 (-$1900)
Loss -$1400
This is the Weight Watchers trade. I did the Buy to Close so I still own the stock.
2/3/20 – Sell to Open 10 WW 2/7/20 $35.00 C @ 55¢ (+$550)
2/7/20 – Buy to Close 10 WW 2/7/20 $35.00 C @ $1.10 (-$1100)
Loss -$550
I sold 100 of my Apple shares. I’m worried about Apple in China.
1/21/20 – Buy 100 Shares AAPL @ $317.50
2/7/20 – Sell 100 Shares AAPL @ $320.00
Profit +$250
The week ended with a loss but not too bad,
Total Weekly Loss -1210
Let’s hope they get the virus under control and the market becomes a little more predictable.
Successful trading,
Steve
The Options Coach