Yesterday I bought 3000 shares of Netflix (NFLX) at $109. Today I decided to sell 30 contracts of the 1/8/16 $110 Call which along with my 3000 shares I now have a Covered Call. I was going to watch the stock a while but after reading a report on the FANG I decided to stay disciplined and stick to my money making strategies. FANG is a new term Wall Street is using for the 4 big tech companies, Facebook, Amazon, Netflix and Google. This report said “First Trust Dow Jones Internet Fund appears poised for a deeper sell-off given vulnerability to profit-taking in the FANG’s.” First Trust Internet Fund is a internet EFT. Who know if this will affect the stocks but right now NFLX is down 290. I have this Call until this Friday and I brought in a premium of $1.25 for a total of $3750. If NFLX stays around where it is until Friday I keep my stock and I keep the $3750 premium. If NFLX goes up above mu $110 Strike Price I will make a $1 on the stock because I bought it yesterday for $109, plus I’ll keep the premium but I’ll lose my stock. I’m in this game for the premium money. If the stock goes above the $110 Strike I’ll have an “Opportunity Lost.” Watch NFLX to see what happens to this trade or watch for my post Friday or Saturday. Since this is a trade to make a Covered Call I give this a Risk Factor of 1. Here is what my order look like:
Sell to Open 30 NFLX 1/8/16 $110 C @ $1.25
Pages to read to understand this trade:
Covered Call
Opportunity Lost
Option Order Form
The Options Coach