On Monday I sold a 10 contract Advanced Micro Devices (AMD) $96 Naked Call. Read here. The stock started to move toward my Strike Price, in fact it went over $96. While it was moving up I bought 1000 shares at $94.75 to cover my Naked Call. I now have a $96 Cover Call to expire tomorrow. Read the post Bought 1000 Shares of AMD.
As I write the stock is at $93.00. I don’t think it will get back to $96 before the close tomorrow. I decided to get another Call sold to expire next week. When you sell your weekly Call a little early you get a better premium. If I am correct and the stock doesn’t get to $96 these shares will cover the new Call I just sold.
I sold 10 contracts of the 12/11/20 $95 Call for a premium of $1.80 for $1800. I lowered my Strike Price from $96 to $95. Originally I went with $96 because it was a Naked Call. I wanted a little room for protection. I believe this new Call will be a Covered Call so I went with the higher premium. I bought the stock at $94.75 and this time I sold the $95 Call.
Sell to Open 10 AMD 12/11/20 $95.00 C @ $1.80 (+$1800)
The Covered Call I have going is a Risk Factor 1. The Call I just sold today is a Risk Factor 4 until the close tomorrow. If the stock closes below $96 I will not get assigned and I’ll keep my stock. At this point these shares will cover this new Call and it will become a Risk Factor 1.
Any questions send me an email.
Successful trading,
Steve
The Options Coach