This was not the best week I ever had, but it wasn’t so terrible either. I only made 2 trades involving Micron (MU) and RH (RH). Let’s take a look at how they played out.
On 11/21/18 I bought 1000 shares of MU. During the time owning the stock I sold a few Calls and brought in some nice premiums. The stock is a very high rated stock but never took off the way I thought it would. In fact, it went down from where I bought in. I originally got into the position for the stock gain more than the premiums. I got in the stock at $48.40 and I felt it was heading to $60. Last week, losing my patience with the position, I decided to sell a Call. To get a decent premium I had to sell the Call with a Strike Price lower than my buy-in price. The stock was at about $44 and my Strike Price was $46. If I went with a $48 Strike the premium would have been a few pennies. I was tired of holding the position, not making money and paying margin interest. I sold the 2 day Call with the stock having to move $2 for me to get assigned. If I get assigned I would have to sell the stock $2.40 below where I got the stock. As Murphy’s Law would have it, on Friday MU made a big move and closed at $46.53. It’s just unbelievable how things work out in the market some times. Anyway, I keep my $450 premium but was assigned on my stock at $46. It really doesn’t bother me much because I wanted out of the position, but it might bother me if MU goes to $60.
2/20/18 – Sell to Open 10 MU 2/23/18 $46.00 C @ 45¢ (+$450)
2/23/18 – Expired 10 MU 2/23/18 $46.00 C
Profit +$450
As I said, I was assigned on my stock and took a loss selling at $46. I’ll watch MU closely. For now I’m out and I move on. If I get back in you’ll be the first to know.
11/21/17 – Buy 1000 Shares MU @ $48.40
2/23/18 – assigned 1000 Shares MU @ $46
Loss -$2400
Last week RH earnings were due out on Thursday. They never were released which caused confusion. It’s still unsure when they’ll be released. I’m a little concerned because I’m holding 2500 shares. Last week with the earnings date of Friday caused very high premiums. I sold 5 contracts of the $95 Calls with the stock in the $93 area. It was a 3 day Call and I received a $3 premium. I never sold a Call on the other 2000 shares because I was waiting for the stock to go up for a better premium but it never did. I have those shares at a higher buy-in price. The week ended with me only selling the 5 contracts. I was not assigned and I keep the premium.
2/21/18 – Sell 5 RH 2/23/18 $95 C @ $3.00 (+$1500)
2/23/18 – Expired 5 RH 2/23/18 $95 C
Profit +$1500
It could have been a nice week if I wasn’t assigned on MU but I was and the week ended in the red.
Total weekly loss -$450
Steve
The Options Coach
Hello Steve. I think this is the first time I have observed you made a loss in any given week since the beginning of 2017. It may be worth listing that track record – number of winning trades since 2017. Quiet amazing.
Would you have done something differently if you were not using margin for your trade?
All my trades for the year are listed in my “Trade History 2018.”
The fact that I work on margin can definitely influence my trading decisions.