HI all. I can't find many trades that i like while trying to use weeklys.
I decided I will sell some covered calls with LVS
If you put 3 traders in a room and ask how they figure their returns, you would probably get 3 different ways.. So what I did this morning and profits are as follow (how I figure them)
I bought 1000 shr's of LVS paid 58,585
I sold the CC's at the 50 strike (covered calls) for 1,420
The CC's are for weeklys So only 4 days to go.
Here is how i figure the results...
received 1420 for the cc
but will sell the stocks for 50. even though I bought it for 50.58 So this is a loss on the stock for 580 [1000 x .58]
So..(keep track now..lol) 1420-580= 840 net if the stock stays over 50
As I only needed 14,817 maintenance this pencils out to 840 div by 14,817= 5.66% return for a weeks work.
I don't do many CC's anymore as you have to put out money while buying the stock. I much prefer to have money coming my way !!! But you must stay flexible in this options field.
I will keep you posted on the results of this play.
4 comments:
The ROI makes sense. If it's over 50 at close on Fri, your shares are called away and you net 840. Mission accomplished. But if it drops below 50 you keep the 1420 for the calls but then you have a paper loss on the stock. Your breakeven I think is 49.16 (50.58-1.42). But then it probably makes sense to sell the stock if it gets to that level.
Just spotted this one. I know it's a low priced one but holy cow, a 50% return with a 48% cushion.
OREX closed at 5.83 today and a 3.0 strike bid price of .30.
Ed
wow, too wild for me. the analyst all say sell sell..lol That probably means it is a buy...
Big event on Jan 7, FDA review panel for OREX's diet drug. Previous two drug companies (this year) did not get recommendations (VVUS and ARNA). Maybe third time will be the winner?
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