Steel stocks are on the move. Several candidates look primed for higher prices, including, but not limited to U.S. Steel. We will likely day trade some of these names today, much like we did with AMD and NVDA on Tuesday for handsome gains. Join Us!
Since we are bullish, we would like to see RSI, STO and MACD continue on their northbound train. Price is above the 9/20ema. And, the stock broke out of a small 5 day flag on Tuesday. We could buy the shares and swing the position, with a stop at 40.00 or we could sell some covered calls.
We are looking for a quick trade on U.S. Steel (X) with the weekly options expiring this Friday.
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If we sell the 24-FEB 40.50 strike at 1.38 or better we could collect $138.00 per option contract. With a 1000 share trade, we stand to make $1380.00 in premium. The trade works like this:
Considering the premium received, our cost basis becomes $40,090.00 which is also our break even if the stock suddenly declines. Unlikely.
If you are more bullish and think price will reach 42.00 in the short term, you could sell the 17-MAR 42.00 call for 1.93 bid. These expire in 24 days.
| You could generate $1,930 by trading a covered call. You could sell 10 contracts of X 2017 17-MAR 42.00 CALL. If the stock were to rise before expiration you could make a profit of $2,360. This trade will also get you 4.6% worth of downside protection for your stock. | ||||||
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Of course you could just buy the common and forget about selling covered calls, while the stock looks ready to run higher.
Happy Trading – CV