Hello Investors,
A few changes today. First, we sold a partially covered call in Dicks Sporting Goods (DKS). Since we own 20 shares, we are partially covered. However, we are also 80 shares or 80% uncovered or “naked” on the covered call. So, it is not without its risks. If you wish to simply hold your stock position and not enter this more risky naked call position, that is perfectly fine.
We own 20 shares of stock so this is a mostly “naked” covered call:
Sold to open: DKS Dec 15th (monthly) 147.00 strike call
Credit: 0.95
We bought a long call on SBUX and long put on ON. This creates a market neutral dynamic where systemic risk is zero. However, we do have the unique company stock price risk in each.
Buy to open: SBUX Jan 19th (monthly) 95.00 strike call
Debit: 4.70
Max risk = 4.70 or $470.00 per contract
Max reward = unlimited
Buy to open: ON Jan 19th (monthly) 75.00 strike put
Debit: 4.92
Max risk = 4.92 or $492.00 per contract
Max reward = unlimited
We are going to try to keep our risk at $200 or less in each trade.
Have a great week!