I own 400 shares of Zoom (ZM) at $508. This week, with ZM about to announcement earnings, I sold 4 contracts of the $520 Calls in anticipation of good earnings. I received a high premium of $16.50 for $6600.
The earnings were announced and they were great! However, the stock went down. I’m nowhere near getting assigned on these 400 shares at the close today so I keep the $6600 and I just sold another Call to expire next week. I sold 4 12/11/20 $465 Calls for a premium of $3.20 for $1280. You can see the premiums are a lot higher when news is about to come out on a company.
Sell to Open 4 ZM 12/11/20 $465.00 C @ $3.20 (+$1280)
When I sold the Call the stock was at $416. I don’t think it will get to the $465 Strike Price by next Friday, but you never know! I’ll watch closely. If the stock gets up to this area I’ll be ready to buy another 400 shares to cover this Call so I don’t have to deliver at $465 and lose money on the stock I bought at $508. In the meantime this Call will be covered with the $508 shares. Considering this and the volatility of this stock I give this trade a Risk Factor 2.
Successful trading,
Steve
The Options Coach