This week’s completed trades and my total weekly gain was as a result of one trade. That’s right! I made one trade this week and my total weekly gain is $19,450. The largest gain of 2017. The sad part is I wish I never made the one trade. Let me explain.
On 10/16/17 I bought 1000 shares of RH at $81. On 11/7/17 I bought another 1000 shares. At this point I had 2000 shares of RH, and everyone who reads Main Street beats Wall Street knows I’ve been selling weekly options on these shares and bringing in a lot of great premiums. I’ve been picking Strike Prices that were out a little so if I got assigned I’d make a nice amount on the stock while making nice premiums. This past Monday, to start the week, I looked at the premiums with the hopes of selling another Call. I noticed the premiums were very high and I knew earnings were not due until Dec 7th. I did a little investigation into why the high premiums. I didn’t see any news, so with the stock in the $86 area I sold a 11/17/17 20 contract Call with the Strike Price of $90. With the stock $3 Out-of-the-Money I received a premium of $3.20. That’s crazy! For my 20 contracts I received $6400. Little did I know, after the close on Wednesday RH was going to announce their guidance for the coming year. They said the company was going to have a great year, and Thursday the stock went up over $20. On Wednesday the stock closed around $83 and it went up to the $104 area. At this point I know I’d be getting assigned but it wasn’t so bad because my account just went up $20,000. The stock at $83 the day before and being assigned at $90 (my Strike Price) is $7, that’s $14,000 on 2000 shares. Plus the $6400 premium, $20,000!
Below is the result of the stock assignment and the Call sold.
10/16/17 – Buy 1000 Shares RH @ $81
11/17/17 – Assigned 1000 Shares @ $90
Profit +$9000
11/7/17 – Buy 1000 Shares RH @ $85.95
11/17/17 – Assigned 1000 Shares @ $90
Profit +$4050
11/13/17 – Sell to Open 20 RH 11/17/17 $90.00 @ $3.20 (+$6400)
11/17/17 – Expired 20 RH 11/17/17 $90 C
Profit +$6400
If I never sold the Call I would have realized the entire gain on the stock. The stock closed at $102.26. Being assigned at $90, my Opportunity Lost was a little over $12. I would have made an additional $24,000. O Well! I made some nice money on the stock and brought in a great premium. Selling Call options is my strategy and I’m happy I stick with it. Who knows, I probably wouldn’t have sold the stock on Friday. Monday anything can happen. I’m happy!
Total Weekly Gain +$19,450
Enjoy the rest of the weekend!
Steve
The Options Coach