It’s a busy day because I’m finding deals I like. I’m sorry for all the email. If my trades were executed a little closer together I could include a few trades in one email but it’s not working out like that so I must report as they get executed. I was just executed on an RH “Buy-Write” I entered a while ago. I was executed on buying 500 shares at $62.80 but it took a while to get my Call sold because I entered a very high premium so the stock had to move a bit. I did this because this stock is very volatile so I figured if I put in a high premium it might take a while but I thought the stock would get up to the level to get my Call executed with the higher premium, and it did! I sold 5 contracts of the RH 6/30/17 $33.50 Calls and got my $2 premium for a total of $1000 on the 5 contracts. A “Buy-Write” is a Covered Call so this trade gets a Risk Factor 1. Here’s the buy order for the stock and the sell order for the option.
Buy 500 Shares RH @ $62.80
Sell to Open 5 RH 6/30/17 $33.50 C @ $2.00 (+$1000)
If the stock stays up at the level it’s at now I’ll get assigned and make 70¢ on the stock sale in addition to the very nice premium. The stock is moving! As I write it’s up to $64.05.
With this very nice premium, the sale of the option alone gives me a Rate of Return of 3.1% for the 4 day Call. If I get assigned the return on the “Buy-Write” will be 4.3%.
Steve
The Options Coach