On May 5th I bought 2000 shares of RH at $58.38. I’ve been selling Calls on these shares since I purchased them and I’ve been bringing in nice premiums for a few week now. Today, watching the stock to try and sell another Call for this week, the stock jumped up as it does most days. When it was up to $58.70 I sold my 2000 shares.
5/8/17 – Buy 2000 Shares RH @ $58.38
5/22/17 – Sell 2000 Shares RH @ $58.70
Profit +$640
This stock is very volatile, so when it was up and I saw an opportunity to lock in $640, I did.
Also while the stock was up I sold a Naked Call. When the stock was at $58.70, if I was to sell a Call instead of selling the stock, I would have sold the Call with the Strike Price of $59. Since I sold the stock and I was selling a Naked Call, I went with a higher Strike Price of $60. This gives me a little more breathing room so hopefully the stock doesn’t get to $60 by this Friday and I won’t have to cover the Call by buying the stock again. Naked Calls have always been my favorite strategy!
As I write RH is moving down and it’s over $2 Out-of-the-Money, but it is a Naked Call on a very volatile stock so I give this trade a Risk Factor 5. Here’s the order:
Sell to Open 20 RH 5/26/17 $60 C @ 70¢ (+$1400)
I was away for 3 days for my birthday (May 20th) at my daughter’s house in Pennsylvania, so I didn’t get my weekly results done. I’ll get it sent out in a few minutes. I am continuing my birthday celebration with a trip to Texas. I’ll be seeing a friend in Dallas for a few days then I’ll be going to Austin for the balance of my trip. I’ll be watching the market but I’ll also enjoying these great cities of Texas, so my post will be limited. I will be on my email. If any readers live in one of these cities and have some suggestions on special things to do send me an email.
Steve
The Options Coach