Right now it’s 9am and the market has a half hour before it opens. With the correct program you can participate in pre-market trading. You can trade stock starting at 8am. Stock only, not options! Well yesterday I sold 20 contracts of GPRO Naked Calls. This represents 2000 shares of stock. Whenever you sell a Naked Call you MUST watch that stock closely. If the stock goes up and approaches your Strike Price, I highly recommend buying the stock which will make your Naked Call a Covered Call. So practicing what I preach, this morning at 8am I started watching what GPRO might do today. I saw with pre-market trading the stock was up $.80. I went to the news feed and under GPRO I saw “Gapping up.” The first line of the story was “Gapping up in reaction to strong earnings/guidance.” I immediately set my computer to “Pre-market Trading” and put in an order to buy 2000 shares of GPRO to cover my Naked Call I sold yesterday. My Strike Price is $20. This is the price I will have to deliver the stock for if the stock goes up. This Call expires this Friday. My order got executed for the 2000 shares at $19.89. Since it looks like the stock is going to go up a bit, I’m very happy I own the stock. Even if it didn’t move big this week I think it will soon, so I’m happy to be covered. Watch GPRO and see what happens to this trade. I put a Risk Factor of 1 on this trade. This is a very low risk trade. This is the order to buy the stock:
Buy 2000 shares GPRO @ $19.89
Pages to read to understand this trade:
Naked Calls
Covered Calls
The Options Coach