As most of you know, I own 2000 shares of RH. I bought the shares at 3 different times adding up to 2000 shares. On 12/11 I bought 1000 shares at $104.60. Also on 12/11 I bought 500 shares at $102.60, and on 12/12 I bought another 500 shares at $99.30. As the stock was moving down I was lowering my average buy-in price. The result is I own 2000 shares and my average price per share is $102.78. To keep things simple, In my “Active Trades/Current Positions” I will list my position as bought 2000 shares at $102.78.
With the market up today RH is on the move. As I write, the stock is up 3%, +$2.98 to $102.61. I just sold a 20 contract $104 Call expiring this Friday for a premium of $1.75 (+$3500).
Sell to Open 20 RH 12/22/17 $104 C @ $1.75 (+$3500)
I’m in the 2000 shares at $102.78. If I get assigned I’ll make $2440 on the stock sale, plus the $3500 premium for a total of $5940. This would be a great trade and this is what I want to happen.
If the stock stays below my Strike Price of $104 I will not be assigned. I’ll keep my 2000 shares and I’ll keep the $3500 premium. Either way I’ll be happy. The only thing that can throw a monkey wrench into the success of this trade is if the stock tanks and moves down big.
This is a Covered Call on previously owned stock so the trade gets a Risk Factor 1.
I’ve had a great year and I want to hold onto my gains to start fresh on Jan 1, 2018, so quite possibly this will be my only trade of the week.
You might have noticed I didn’t send out a weekly results for last week. The reason is I didn’t make any trades.
Steve
The Options Coach.