With United Airlines (UAL) at $50.50 and up about $3 on the day I sold 10 UAL 3/13/20 $48.50 Calls. This is a dangerous trade because the stock was $2 In-the-Money. I feel this coming Friday UAL will be below my Strike Price of $48.50. As I write the stock is falling and it’s already down to my Strike. This is a Naked Call so I hope the stock continues to drop.
Because I sold the Call with the stock $2 In-the-Money I received a huge premium of $4. On my 10 Calls thats $4000. If the stock stays below $48.50 I’ll keep the premium and I’ll never have to buy the stock.
Sell to Open 10 UAL 3/13/20 $48.50 C @ $4.00 (+$4000)
This is the kind of trade I really don’t want to report at this time because it’s not for Grasshoppers. Main Street beats Wall Street is a learning site and I don’t want new traders making trades like this. This is a Naked Call that was $2 In-the-Money when I sold so the trade gets a Risk Factor 5.
Again, as I write UAL continues to drop, it’s down to $48.
This trade is for a hedge against the market moving down.
Successful Trading,
Steve
The Options Coach