Hi Readers! I haven’t had much activity with post in the last week or so. Most of you know I have a large position in RH, which has been tanking. There has been some confusion to when the company would be releasing their corp earnings. With this confusion I brought in some large premiums from selling Calls. When earnings are due the volatility raises and the premiums go up. With the multiple earning announcement dates on different sites and the volatility high, I was able to capitalize on some very nice premiums. However, with the stock tanking into earnings, and me owning 2500 shares, my account took a beating. Yesterday the earnings were finally released. It was a nerve racking day because my shares were down over $20 from my buy-in price. With good earnings the stock would go up but with bad earnings it would tank further. Thank God the Street was happy with the report and today the stock is up over $17 as I write.
On 2/14/18 I owned 2000 shares. Many websites reported that RH was reporting earnings soon, so I bought another 500 shares with a Buy-Write with the stock at $93.50. You can read that post at 5 Contract RH Buy-Write. The stock was moving and I wanted to get a premium and get assigned. I didn’t get assigned but kept the $1000 premium. The problem was, I now own 2500 shares. A little rich for me!
On 2/21/18 and an announcement that earnings would be coming the next day, I sold another 5 contract Call. This time the premium was $1500. Again, I want the stock to go up, me get assigned, keep the premium and reduce my position. The earnings release confusion continued because they were not released. I did not get assigned again but I keep the $1500 premium. The problem was, the stock continued to tank.
Yesterday the earnings finally came. They were good and the stock is up big. Today with the stock at $93.90 I sold another 5 contracts of the $95 Calls expiring tomorrow. Remember I bought these 500 shares at $93.50. I received a $1.50 premium for $750.
Sell toOpen 5 RH 3/29/18 $95 C @ $1.50 (+$750)
As you can see I’ve been bringing in nice premiums with these 500 shares. Again, I hope the stock closes tomorrow above $95 and I get assigned. My first premium was $1000. The second $1500. And now another $750. I feel very lucky that the earnings were good and I have another opportunity to get another premium and possibly get assigned. If the stock gets above $95 I’ll reduce my position, make money on the stock, and keep all the premiums.
During this time I was only selling Calls on the 500 shares and not the 2500. The other 2000 shares I owned at a higher price. I was not able to get a good premium because I need a higher Strike Price in fear of getting assigned with a lower Strike Price and losing money on the stock assignment.
Today my account is up a lot of money but most of my stock is still not to my buy-in price. But I do feel a lot better with the stock up over $17 today.
I know this is all very confusing! I’m only reporting what I did lol. If you have any questions send me an email.
I would like to welcome some new Main Street beats Wall Street readers. Good luck with your education.
With Facebook down the last week I just bought another 30 shares for my “Gift Account.” I bought at $153. I now own 50 shares of FB in that account.
Steve
The Options Coach