In my “Results Week Ending 3/31/17” I reported that I put in an order to do a “Roll-out” on my Short Call I had on RH. I sold 15 contracts of RH 3/31/17 $39 C last week and RH went on a crazy run putting me in a bad situation. With the expiration of this option coming on Friday I decided not to take the loss and do a “Roll-out.” OnFriday, before the close, I put the “Roll-out order in. I put the order in as 2 trades. One was a “Buy to Close” to close out the option I sold, and the other was a “Sell to Open” order to “Roll-out” the option. Below are the 3 trades to make the “Roll-out.”
Sell to Open 15 RH 3/31/17 $39 C @ 90¢(+$1350) Original Option
Buy to Close 15 RH 3/31/17 $39 C @ $7.30 (-$10,950) Close Original Option
Sell to Open 15 RH 8/18/17 $40 C @ $8.10 (+$12,150) Open the Roll-out Option.
Earlier in the week Goldman lowered their rating on the stock, which did not affect the stock in a negative way. Many other banks have a hold (or less) rating. The stock has been on a huge run the last few weeks which put me in this position. Clearly I feel RH will not hold this high stock price. In order to get the premium I need to cover the “Buy to Close” and make this a profitable trade, if things go well, I had to go out to the August 18 Expiration Date. I will be reporting on this position as time goes by for you who don’t understand Rolling. Please read my page on how it works and email me any questions you might have.
Steve
The Options Coach