Closed my MPW Option/Bought More Shares

On 2/15/23 I sold a 10 contract Call against my 1000 shares of Medical Properties Trust (MPW). This Call gave me a premium of 40¢ for a total of $400. Today the stock is down and the premium went down to 9¢. The premium coming down is a result of 2 factors: 1, the stock came down and 2, Time Decay ate away at the premium in my favor. When you sell Calls Time Decay is your friend.

With the premium at 9¢ and still 10 days until expiration, I decided to do a Buy to Close and close out the position taking a $310 profit. If I held until expiration I would have kept the entire $400 premium but with 10 days remaining I think I’ll get another Call sold within that time.

2/15/23 – Sell to Open 10 MPW 3/3/23 $13.00 C @ 40¢ (+$400)

2/23/23 – Buy to Close 10 MPW 3/3/23 $13.00 C @ 9¢ (-$90)

 Profit +$310

 

With the $310 profit I decided to buy more shares of MPW. I started the day with 1030 shares and with the premium I received I bought another 25 shares. I now own 1055 shares. 55 of these I bought with premium money from selling Calls. These are in my non-margin account and I’ll hold them for the dividend which has the Day Date of 4/13/23.

I will continue to accumulate shares with the premiums from selling Calls and shares I get as dividends. I might even buy more shares with cash. I plan on keeping these shares long term. As long as MPW continues to pay the dividend I like.

 

Successful trading,

Steve

The Options Coach