I would like to welcome the new readers to Main Street beats Wall Street. Make sure you do your studying. Trading options is not a get rich quick scheme. Get your information from books, Google searches, my site, etc. If you trade carefully and with a lot of disciple you can be successful and make some nice money. Before you make a trade read all section of Main Street beats Wall Street and email me any question you might have. I’ll help however I can.
As most of you know, most of my trades are between 5 and 10 contracts. Some a little higher. I’m trying to make a commitment to make some Grasshopper trades which will be 1 or 2 contracts. I’m doing this to help show you that you can make money even if you’re a beginner and don’t have much money to start with. It’s not the return that’s important but the Rate of Return; the percent of return on your investment. If I sell a 10 contract Call and you sell the same option but only a 1 contract Call, we will make the same Rate of Return. I would make more money because I invested (risked) more money, but If I brought in 2% for a 1 week trade, you would bring in 2% for the 1 week trade. 2% of the money we invested.
This week I had 3 trades that were completed. All were Grasshopper trades. 1 was with RH, 1 was with Nvidia (NVDA) and 1 was with Netflix (NFLX). NVDA and NFLX were Grasshopper trades, but very expensive Grasshopper trades. I’ll explain. Let’s take a look at one at a time.
RH
I already own 2000 shares of RH but cannot sell Calls because the price is much lower that where I bought in. I cannot get a decent premium. I decided to buy another 100 shares at $85.80 to do a Grasshopper trade. I wanted to show you how you can make money selling options investing a smaller amount of money. I bought the stock at $85.80 and sold a 1 contract Call for a $2 premium. On 1 contract that’s $200. At this point I invested $8580 and brought is a $200 premium for selling the Call Option. That’s a Rate of Return of 2.3% for a 1 week trade. I know $200 doesn’t sound like a lot of money but 2.3% in 1 week is fantastic! I know people who lock up money for 5 years with CD’s to make that return. I did it in 1 week. If you don’t have a lot to invest this is how you get started. not only are you making money but you are learning the game and getting an education. This education will some day make you a lot of money. Slow and steady, steady and slow. The tortoise wins the race. Below are the trades I made:
4/16/18 Buy 100 Shares RH @ $85.80
4/20/18 – Assigned 100 Shares RH @ $86.00
Profit +$20
4/16/18 – Sell to Open 1 RH 4/30/18 $86.00 C @ $2.00 (+200)
4/20/18 – Expired 1 RH 4/20/18 $86.00 C
Profit +$200
NVDA
With NVDA I bought 100 shares at $229.50. This is not you typical Grasshopper trade because of the price of the stock. Buying this 100 shares cost me $22,950 which is expensive. Against these 100 shares I sold 1 contract of the $230 Calls for a $4 premium, $400. this is a 1.7% return for a 1 week trade. The stock did not stay above my Strike Price of $230 so I was not assigned. I keep the $400 premium and I keep the 100 shares of NVDA. As I write I’m trying to sell another 1 week Call.
4/16/18 – Sell to Open 1 NVDA 4/20/18 $230.00 C @ $4.00 (+$400)
4/20/18 – Expired 1 NVDA 4/20/18 $230.00 C
Profit +$400
NFLX
Before I got into this trade I owned 100 shares of NFLX in my Gift Account. Last week I bought another 100 shares at $313.10 with NFLX going into earnings. The earnings were great and the stock went up $20. With NFLX on a roll I bought another 100 shares at $333.85. On Friday the 20th, against the 200 shares I bought, I sold a 2 contract Call to expire 4/27. I received a premium of $3.10. On the 2 contracts that’s $620. The same day the stock pulled back and the premium went down to $1.50. I decided to do a “Buy to Close” and get out of the trade with a $320 profit. I was in the trade for a few hours. Today, Monday, as I write I’m trying to sell another Call.
4/20/18 – Sell to Open 2 NFLX 4/27/18 $345.00 C @ $3.10 (+$620)
4/20/18 – Buy to Close 2 NFLX 4/27/18 $345.00 C @ $1.50 (-$300)
Profit +$320
Total weekly Gain +$940
This is not a huge gain but I’ll take it! It’s $940 on 3 trades. What’s wrong with that?
If you have any questions on any of these trades send me an email.
Steve
The Options Coach