Sell Existing Position – Upwork (UPWK)
On Friday Upwork (UPWK) stock closed at 14.74, which was below the August 15 strike that we had sold last month. Because the stock closed below 15 the calls that we sold for $1.65 expired worthless. This is a good situation.
Today I am going to sell my stock position as UPWK has been very choppy the last month, and not really participating in the markets advance.
We will walk away with a profit of $165 per call sold, and a minimal stock gain. In essence we created a yield of 12% in just over one month’s time as the stock went nowhere … this is the scenario in each week’s write up that I refer to as “static return.”
While I am selling my stock this morning, if you would prefer to sell a new call to create even more yield, I might target the September 15 call for around $0.75. However, I will not be executing that trade or tracking it.
One last note, because of the outstanding success of Cabot Profit Booster we have had many new members join ... I appreciate all the very nice emails about your profits as well as you all telling your friends about this service.
However, because we have so many new members, I did want to address the expiration process via a question I received from a subscriber this weekend.
The email essentially said:“I just received an e-mail from my broker that my account has been assigned the following positions:
NVTA Aug 21 $30 call.
PLUG Aug 21 $9.50 call
RUN Aug 21 $30 call
Am I obligated to buy these positions? What does this mean? Please clarify”
When we sell a covered call the ideal scenario for the trade is for the stock to trade above the call strike price that we sold. At that point we will have made money on the stock rising, as well as collected the call premium. This is the best-case scenario, and exactly what happened for our NVTA, PLUG and RUN positions on Friday (UPWK closed below the strike price).
Once the stock closes above the strike price on Expiration Friday, that weekend your broker and the Options Clearing Corporation automatically take you out of your stock and option position, leaving you without a position in that stock. Essentially you don’t have to do anything, except walk away with your profits.
Be on the lookout for this week’s new covered call idea tomorrow morning.