Tuesday morning my wife and I left home to drive to Boston for Thanksgiving. Before we left I placed an order to sell an option against my LULU shares. This order had an Expiration Date of Friday, Nov 25th. I checked during my drive to see if I was filled but the stock did not move enough. Since it is a short week with Thanksgiving I couldn’t get a decent premium. I decided to change my order to the Expiration Date of next Friday. The stock moved enough to get filled. I own my shares at $356. I sold 1 contract of the LULU 12/2/22 $362.50 Call for a premium of $5 for a total of $500.
Sell to Open 1 LULU 12/2/22 $362.50 C @ $5.00 (+$500)
I received a premium of $5 on a $356 stock. That’s a return of 1.4% for the premium only. If I get assigned I’ll make another $6.50 on the stock. I like to get 1% for a 1 week trade. This is 1.4% for an 11 day trade. Not quite what I like but with assignment it can be a nice return. Thanksgiving made things a little more difficult this week.
Right now it looks like I will not have a trade coming to an end this week. If you remember I sold a Call last week and was not assigned. Then the stock dropped and I had trouble getting a Call sold for this week. This is exactly why I like to get assigned. If I was assigned I would have bought more stock and sold a Call for this week, but since I was not assigned and the stock dropped, I couldn’t get anything done. If I’m assigned, I make the money I signed up for and move on to another deal. In this case I was stuck in the stock with nothing to do.
This trade I made Tuesday gets a Risk Factor 2. This is a Call sold against stock previously owned. As last week, the only risk is the stock going down in this volatile market.
I’m sorry for this late post. I was on the road and yesterday I spent the day with my family.
I hope everyone has a great Thanksgiving!
Successful Trading,
Steve
The Options Coach