In-the-Money Grasshopper Trade with Macy’s

I made a Grasshopper trade with Macy’s. It’s a larger Grasshopper trade, but I feel it’s still good for most Newer traders.

I bought 500 shares of M at $18.20 and sold 5 contracts of the M 5/28/21 $18 Calls at 60¢ for $300.

 

Buy 500 Shares M @ $18.20

Sell to Open 5 M 5/28/21 $18.00 C @ 60¢ (+$300)

To buy the 500 shares at $18.20 cost $9100. It’s a little expensive for a Grasshopper Trade. I sold the $18 Call for a premium of 60¢ for $300. If I get assigned I’ll lose 20¢ on the stock sale ($100). My profit will be 40¢ or $200. This will be a 2.2% return on my investment. I think this is a great 1 week return.

If I don’t get assigned I’ll keep the stock, and the return on this deal will be 3.3%. I like getting assigned, and the In-the-Money Call gives me a better chance for assignment but I’ll be happy either way.

I was also filled on trades with PTON, XPEV and a Naked Call with RBLX. You can see these trades on my Active Trades/Current Positions page.

Nvidia announced a 4:1 stock split on Friday. The stock is up about $25 today along with the entire chip sector. I didn’t do anything yet to play the split because I’m a little worried right now. I think I’ll do something before the split but on today’s big jump I’ll look for a pullback. Also they announce earnings this Wednesday. The split will take place on July 19th. I have some time!

 

Successful trading,

Steve

The Options Coach