Overall it was a pretty nice week in the market. For me it was better than nice, it was very good. The market is in the middle of recovering from the small correction and my stock are doing the same. In my trading account I’m holding 3 stock. I have 1000 shares of Micron (MU) which hit as low as $38 last week closed this Friday at $44.21. I have 2000 shares of Advanced Micro Devises (AMD) which went as low as $10.50 last week and Friday closed at $11.82. And I have 2500 shares of RH which was down to the area of $83.25, which came back and closed at $93.34. All of my shares were bought above where they closed on Friday but they are getting close, and I’ve been doing well with selling options on RH and bringing in some nice premiums. In fact, this week I brought in $4000 in premiums. Let’s take a look at the trades I made to make this type of profit. All trade had an expiration date of this past Friday.
RH
On Monday I sold a $95, 20 contract Call for a $1 premium. On 20 contracts thats $2000. On Tuesday the stock pulled back a bit and with the premium down to 50¢ I did a “Buy to Close.” I closed out the position keeping half of the $2000 with a 1 day trade.
2/12/18 – Sell to Open 20 RH 2/16/18 $95.00 C @ $1.00 (+$2000)
2/13/18 – Buy to Close 20 RH 2/16/18 $95.00 C @ 50¢ (-$1000)
Profit +$1000
On Wednesday the stock bounced back up and I was able to sell another 20 contract Call for another $1 premium ($2000). The only difference this Call was from the first one is, this one had a $96 Strike Price. The stock closed below my Strike Price so the Call expired. I keep my 2000 shares of RH and I keep the $2000 premium.
2/14/18 – Sell to Open 20 RH 2/16/18 $96.00 C @ $1.00 (+$2000)
2/16/18 – Expired 20 RH 2/16/18 $96 C
Profit +$2000
Also on Wednesday I did a 5 contract Buy-Write. I bought 500 shares of RH at $93.50 and sold a 5 contract $94 Call with a $2 premium ($1000). I was hoping to get assigned on this trade but the stock closed at $93.34. I keep the 500 shares and I keep the $1000 premium.
2/14/18 – Sell to Open 5 RH 2/16/18 $94 C @ $2 (+$1000)
2/16/18 – Expired 5 RH 2/16/18 $94 C
Profit +$1000
The stocks I’m holding are going up and down and my account value follows along. But the $4000 premium from these few trades is profit from completed trades. This money is in my mattress!
Total Weekly Gain +$4000
If RH continues to move up this week it will be very nice for my account. I also try to make some money on selling Call on my 2500 shares. This will be a 25 contract trade which will have a big premium. I’m gonna have to watch RH very closely because earning come out this week. I’ll have to watch how the stock moves early in the week, and if I sell a Call, be careful not to get hurt. Let’s watch how it moves and I’ll be writing about what I decide to do.
If you have any questions on RH, or you want to share a strategy on what you would do with 2500 shares with earnings coming, I’d love to hear. I may look at the straddles.
Have a great weekend!
Steve
The Options Coach