Sold 40 PTON Calls

On Monday I sold a 40 contract Call against my 4000 shares of Peloton. I received a premium of $4.75 for $19,000. A few hours after I was in that position the stock dropped and the premium was down to $2.25. I did a “Buy to Close” to close the position locking in a profit of $10,000.

Why did I do this? Why not just hold the Cover Call until expiration and keep the entire 19K?

This is a great question! The answer is greed probably got the best of me. However, I did lock in $10,000 in a few hours.

My thinking was, Peloton would recover and I’d get another Call sold for the $19,000. It was only Monday! Well, it didn’t work out that way. Peloton continued down.

I did mention in the post reporting the move that it normally doesn’t work out the way I want, but I did it anyway.

Today the stock bounced back a bit and I just sold another 40 contract Call. I sold 40 1/29/21 $160 Calls for a premium of $1.60 for $6400. Not bad!

Sell 40 PTON 1/29/21 $160.00 C @ $1.60 (+$6400) 

Remember I’m in this stock at $134.12. If I get assigned at $160 this will be my biggest week ever. If not, I sell another Call next week.

This trade is a Covered Call on one of my favorite stocks so it gets a Risk factor 1.

Successful trading,

Steve

The Options Coach