I didn't mention the profit percentage of this trade.
I took in 737 and needed 25,534 in maintenance funds. 25534 div by 737 = 2.88 % return for 4.5 day trade.
Before doing these naked calls that might involve having to buy the stock to cover your 'what if' scenario. You must be sure you have enough stock buying capability (funds). Also If as i mentioned the potential of buying stock and then it dropping back below what was you trigger point (184 in this case)
I will then own the stock and I will either just sell it next week or sell covered calls on the existing stock.
If any questions regarding this type of trade just add a comment on the posting and I will try to answer it as soon as i see your posting.
4 comments:
Lee,
You've said before that you generally use up all of your avaliable maintenance. If I understand correctly, that means that you'd be buying the 1000 shares of NFLX from some other account.
So, I'm curious, what percentage of your investable assets are you using to sell options?
I usually do use up all or very close to all of my available maint. A lot of maint. was freed up on last Friday when my AMZN puts expired and I just closed a lot of my NFLX puts, Those moves opened up some maint. for me to use. I had planned on not doing much this week but the return was good enough to temp me.
Regarding the % of my funds i use.. I have one account that is dedicated to options only (the one I track here)
I haven't finished reading your book yet but this is more my style trading. I have found your book to be one of my favorite option reads yet.
Thank you fish, I'm glad you enjoy and are learning that Option trading does not have to be the big mystery. i.e: VIX, Delta, Gamma and the whole world of secret things. How the little guy is to use all of those various things I have no idea. A problem is that you can continue to look at all of those factors and never make up your mind as they all point to different results.
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