This week ended up to be a nice one but it was a little scary on Thursday when RH opened lower on some guidance news. During the day the stock was down as much as $8. Thank God it recovered, and recovered more on Friday and closed the week with the stock a little over $57.
This week I had a few trades come to a close. All trades involved Micron (MU) and RH. All trade ended nicely. I had Covered Calls on both stocks. I was assigned on MU but was not on RH. With the big dip in RH, it recovered almost to my purchase price but not to my Strike Price. Let’s take a look at the trades.
Micron
Last week I had a Covered Call on MU, which on last Friday, near the close, it was clear I was going to be assigned on my shares. At the close on 5/5, knowing I’d be out of that position, I sold a 20 contract Naked Call on MU right at the close. On Monday of this week, 5/8, with the stock going up I bought 2000 shares at $27.80 to cover that Call. My Strike Price was $28. This week the stock continued up and closed on Expiration Day at $28.93. I was assigned on my shares making 20¢ on the stock for $400. And I keep the premium of the option which was 50¢ for $1000.
Sell to Open 20 MU 5/12/17 $28 C @ 50¢ (+$1000)
Expired 20 MU 5/12/17 $28 C
Profit +$1000
Buy 2000 Shares MU @ $27.80
Assigned 2000 Shares MU @ $28
Profit +$400
RH
On Monday I entered a 20 contract “Buy-Write” trade with RH. I was executed on the buying of the 2000 shares but I was only executed on selling 3 of the 20 option contracts. This Call had a Strike Price of $60 for a premium of $1. Since I was only executed on 3 Calls the total premium was only $300. The next day with the stock down a little I no longer could get the $1 premium with the Strike Price of $60. I really wanted the $1 so for the other 17 contracts I lowered my Strike Price to $59 and I was able to get the $1. The stock took the big dip on Thursday and never recovered to my Strike Prices of $60 and $59. Both Calls expired and I still own the shares. Below are the two separate Calls. One a 3 contract and the other a 17 contract Call.
Sell to Open 3 RH 5/12/17 $60 C @ $1 (+$300)
Expired 3 RH 5/12/17 $60 C
Profit +$300
Sell to Open 17 RH 5/12/17 $59 C @ $1 (+$1700)
Expired 17 RH 5/12/17 $59 C
Profit +$1700
I still own 2000 shares of RH and I’ll try to sell another 20 contract Call on Monday. I bought the stock at $58.37 and it closed on Friday at $57.04.
Total Weekly Profit +$3400
Have a great weekend! Happy Mother’s Day!
Steve
The Options Coach