This Monday I bought 1000 shares of Weight Watchers (WTW) at $45.50 and sold an At-the-Money 10 contract Call expiring this Friday. With the selling of the Call I brought in a premium of 90¢ for $900. Today with the market sell-off WTW is also down. The premium I sold for 90¢ ($900) is down to 35¢ ($350) so I did a “Buy to Close.” The stock is at $44.75, I figured I have 2 full days for the stock to go up so I closed the position with a profit and I’m out of my obligation of having to deliver the stock at my Strike Price of $45.50. With this move I locked in a profit of $550. I’m hoping for a bounce tomorrow.
10/23/17 – Sell to Open 10 WTW 10/27/17 $45.50 C @ 90¢ (+$900)
10/25/17 – Buy to Close 10 WTW 10/27/17 $45.50 C @ 35¢ (-$350)
Profit +$550
Steve
The Options Coach