I’ve been watching RH a long time, every day! Many days I feel like I know how it’s gonna move. That comes with being familiar with a stock. Today I bought 1000 shares of RH at $99.90. I also sold a 10 contract $104 Call. The stock went all the way up to $105; $1 above my Strike Price. When I look at the candlestick chart, it looks like it hits resistance at that $105 area. Since I’m having a great beginning to 2018 I decided to take a little calculated risk on this Covered Call. I just sold my 1000 shares of RH at $104.32. I just made a fantastic few hour profit on the stock but I am now naked on a $104 Call, with a very volatile stock. I locked in a $4420 profit on the stock, but the Naked Call can put me in trouble if the stock continues up. I don’t think it will since it hit that $105 which I feel is temporary resistance. As I write the stock is at $103.90. I really need it to stay below $104. You know I’ll be watching this like a hawk. If it doesn’t continue to drop and it hangs around the $104 area I’ll buy the stock back to cover the Call again.
1/22/18 – Buy 1000 Shares RH @ $99.90
1/22/18 – Sell 1000 Shares RH @ $104.32
Profit +$4420
If this works out the way I think it will, this will be one great day!
Steve
The Options Coach