I just did a “Buy-write” with Nvidia (NVDA). I bought 100 shares of NVDA @ $185.70 and sold a 1 contract Call for a premium of $2.80 ($280). This Call will expire on Apr 26th, 1 week.
Buy 100 Shares NVDA @ $185.70
Sell to Open 1 NVDA 4/26/19 $187.50 C @ $2.80 (+$280)
This is a true Grasshopper trade. I bought 100 shares at $185.70 per share, which cost me $18,570, and I sold a 1 contract, $187.50 Call for a premium of $2.80. This trade is a 1 week trade and I received a premium with a Rate of Return of 1.5%. This trade also fits into my “1 Week/1%” strategy. I invested $18,570 and received a premium of $280. That’s a 1.5% return for a 1 week trade. This is a perfect example of a Grasshopper trade. Not only is it a 1 week trade bringing in a 1.5% return but it’s with a very good stock. This trade gets a Risk Factor 1.
If NVDA closes below $187.50 on Apr 26th I keep my stock and I keep the $280 premium. If the stock closes above $187.50 I’ll get assigned and I’ll keep the $280 premium. If I get assigned I’ll sell the stock at $187.50 and make an additional $1.80 per share, $180. If this happens, which I think it will, my total gain will be $460. That will be a return of 2.4% return in 1 week on my $18,570 invested. Try to get that from a bank!
Steve
The Options Coach