Bought CLF today ...
Surprise, surprise, considering how negative I've been on the stock.
Couldn't resist the increase in the implied volatility of the options.
So I bought shares first, just below $27, then sold Jan 31 $27.50 Calls against all the shares and put $1.17/sh in my pocket. There seems to be some pumping of this stock in the news which is getting investors hankering to buy the thing (especially if they don't read all the news). Those new buyers are giving me an opportunity to take advantage of them.
As discussed before, there is some pretty good resistance just below 28. If my stock is assigned -- I sort of hope it will be -- my profit yield will be 6.26% for the month, which is way over my minimum monthly threshold of 3%. If assigned at the end of January, that monthly yield is equal to a compounded annual yield of 107%. The nearest support for CLF is at $25. That's near enough to my stock purchase price such that if the stock is not assigned in January then I'll be able to leech additional money from CLF by selling new Calls that expire in February.
This type of trade is Bullish by buying the stock, then Bearish by selling the Calls. The Calls are usually bought by those who are greedy and think they will make a killing on the trade -- they love the options leverage. They are usually wrong*. I am happy to accommodate them. Even if they are right, I still get my 6.26% after assignment.
* Strictly an opinion. I don't wish to hurt anyone's feelings.
