I owned 2000 shares of RH the last few weeks and I’ve been bringing in some nice premiums. This Monday I sold a 20 contract $73.50 Call against these shares. Today the stock was up big to $77. I felt the stock was gonna start pulling back so I sold half of my stock position (1000 shares). The problem with this move is, I now own 1000 shares of the stock but I have 20 contracts of the Call sold, I’m Naked on 10 contracts. I did this with the hopes the stock will go down and I can buy my way out of the Calls and close the Naked position. Well, the stock did drop down and when it was at $76.02 I was executed on a “Buy to Close” on 10 contracts for $3. Now that I sold the 1000 shares and did a “Buy to Close” on 10 contracts, I now have a 10 contract Covered Call left. Here are the trades getting out of half my position.<\/p>\n
9\/22\/17 \u2013 Buy 1000 Shares RH @ $72.50<\/p>\n
10\/4\/17 \u2013 Sell 1000 Shares RH @ $76.85<\/p>\n
Profit +$4350<\/strong><\/span><\/p>\n 10\/2\/17 \u2013 Sell to Open 10 RH 10\/6\/17 $73.50 C @ $1.00 (+$2000)<\/p>\n 10\/4\/17 \u2013 Buy to Close 10 RH 10\/6\/17 $73.50 C @ $3.00 (-$3000)<\/p>\n Loss -$2000<\/strong><\/span><\/p>\n Total profit on the Covered Call +$2350<\/strong><\/span><\/p>\n <\/p>\n What did I make this move?<\/strong><\/p>\n I bought the stock at $72.50 and sold the 1000 shares at $76.85. This gave me a $4350 profit<\/strong>. But I still had the obligation to deliver the stock at $73.50. When I did the “Buy to Close” on the option it bought me out of the obligation of delivering the stock at $73.50. I sold the option for a premium of $1($1000) and bought it back for $3 ($3000) for a loss of $2000<\/strong>. With the stock gain of $4350 and the loss on the option of $2000, I have a profit of $2350. If I held this position until expiration (this Friday) my profit would have been $2000. $1000 on the stock and a $1000 premium. Because I made this move I locked in an extra $350 in profit and I freed up some margin to make another trade. Possibly with RH tomorrow.<\/p>\n If you do not understand this move, please send me an email.<\/p>\n <\/p>\n Steve<\/p>\n The Options Coach\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" I owned 2000 shares of RH the last few weeks and I’ve been bringing in some nice premiums. This Monday I sold a 20 contract $73.50 Call against these shares. Today the stock was up big to $77. I felt the stock was gonna start pulling back so I sold half of my stock position […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-3634","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75MP0-WC","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/3634","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3634"}],"version-history":[{"count":1,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/3634\/revisions"}],"predecessor-version":[{"id":3635,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/posts\/3634\/revisions\/3635"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}