Results Week Ending 2/12/21
Do not just read the “Total Weekly Gain.” You must read this entire post.
This week is the biggest week of the year, but it comes with a story. In last week’s report I wrote I was going to work at bringing in less money, and I wanted to limit my income to $10,000 a week. The reason for this is a want to start building the money I’m holding on the sidelines for when the correction comes. It turns out I had the biggest week of the year. Why?
This was a great week but I must explain why it really isn’t. This story involves Peloton, the first trade listed.
I bought 4000 shares of Peloton on 12/16/20 at $134.12. I’ve been selling Calls and bringing in great premiums every week without assignment. All the premiums from these Calls add up to a lot of money. Peloton is the main reason for my great success in 2021.
This week I was finally assigned on these 4000 shares at $148 giving me a $55,520 profit on the stock sale. This is real profit, and it’s much appreciated. However, it is not reflected in my account balance, meaning my year starting account balance is not $55,520 higher because of this sale.
You see, I bought the stock in December at $134.12. The stock closed the year at $151.72 and opened 2021 at $152.51. This means that 2020 ended and I had about a $73,000 gain in Peloton, which was in my year ending balance in my account for 2020. I was assigned at $148 this Friday with a profit of $55,520. Clearly with the money I’ve been bringing in my account is not lower for 2021, but my 2021 balance is not higher because of this peloton trade. My account is actually lower than you would think because of Peloton. When it comes to the stock, not counting the premiums, I’m at a loss with Peloton for 2021. For accounting purposes my gain was in 2020. For Main Street beats Wall Street I list the gain when I exit the position. The peloton stock caused my account to go down in 2021 because the stock closed 2020 at $151.72 and I sold the stock at $148.
The Bottom Line: My account is not as high as it seems. I opened the year with $850,000 in my account. If the closing of this Peloton position was the ONLY trade I made in 2021 my account would be down $14,880. BUT in Main Street beats Wall Street I would have it listed that I locked in the $55,520 in 2021 because that’s when I closed the position. When you look at my “locked in” profit it could be deceiving, especially in January and February when I might exit positions I entered the year before.
Is this important? No. But if you wanted to know my account balance you would have to add up my weekly gains for the year and subtract the $14,880 and the $55,520. Also, you would have to add up all the positions I’m holding at a loss. The big one being Palantir. I own 5000 shares at $45 and 2000 shares at $40. The stock is at about $32. This adds up to $81,000. I’m up nicely on the year, but if you add all the numbers to be substrates from my weekly gains, it doesn’t look as good. Not to worry, Palantir will be coming back. I promise I will not lose money on this stock this year, it’s early!
I’m writing this because I like to be completely transparent!
Why did Peloton not work out as good as I wanted?
I’ve been selling Calls against my Peloton for a long time bringing in big premiums. This week I was having trouble getting the premium I wanted. I’ve been selling the $157.50 Calls the last few weeks and bringing in great premiums. This week the stock backed off a little and was hanging around the $145 area. Since it was in that area for a few days the Implied Volatility (IV) dropped. Which means lower premiums. I waited for the stock to come up but it never did. On Thursday, with the stock at $145 and only one day to the Friday Expiration, I decided to bring in whatever premium I could. I sold the $148 Call for a premium of 75¢ for $3000. I figured the stock would stay in the same area until the close on Friday. As Murphy’s Law would have it, Friday the stock took off and went up $8. You know I don’t let Opportunity Lost bother me, but this one did! It did because I really didn’t want to lower my Strike Price to $148 because I always wanted the $157.50 out of the stock. I guess it’s not the Opportunity Lost that bothered me, but the fact that I got greedy for the $3000 premium, and it backfired. The bottom line is I made a profit, a large profit! I’ll be back in Peloton this week but not with 4000 shares. I presently own another 1000 shares which was not part of these 40 contract Calls. I might buy another 2000 this week.
If I was not assigned on these 4000 shares of Peloton my weekly profit would have been $10,400. Exactly where I wanted to be. With the Peloton assignment the weekly profit went to $65,920.
Let’s look at the trades:
Peloton
This is the Covered Call I’ve been writing about. Either way you look at it this is a great profit on a stock sale!
12/16/20 – Buy 4000 Shares PTON @ $134.12
2/12/21 – Assigned 4000 Shares PTON @ $148.00
Profit +$55,520
2/11/21 – Sell to Open 40 PTON 2/12/21 $148.00 C @ 75¢ (+$3000)
2/12/21 – Expired 40 PTON 2/12/21 $148.00 C
Profit +$3000
Sundial Growers
This is a Covered Call I did with a low priced “Reddit stock.” I did this for a little fun. I was not assigned and brought in a premium of 20%. Crazy!
2/10/21 – Sell to Open 25 SNDL 2/12/21 $3.00 C @ 60¢ (+$1500)
2/12/21 – Expired 25 SNDL 2/12/21 $3.00 C
Profit +$1500
Tesla
Tesla came down this week but not before I brought in a nice premium on a Covered Call I was not assigned on. Tesla will be back up for me to get another Call sold. I only own 100 shares. I was assigned on 200 shares last week and I decided to not get back in those shares.
2/5/21 – Sell to Open 1 TSLA 2/12/21 $865.00 C @ $20.00 (+$2000)
2/12/21 – Expired 1 TSLA 2/12/21 $865.00 C
Profit +$2000
NIO
Another electric car company. I wasn’t assigned.
2/2/21 – Sell to Open 10 NIO 2/12/21 $66.00 C @ 75¢ (+$750)
2/12/21 – Expired 10 NIO 2/12/21 $66.00 C
Profit +$750
Xpeng
I felt this stock was gonna go up and I sold a Put. The stock did go up and I wasn’t assigned. Free Cash!
2/8/21 – Sell to Open 10 XPEV 2/12/21 $45.50 P @ $1.00 (+$1000)
2/12/21 – Expired 10 XPEV 2/12/21 $45.50 P
Profit +$1000
Palantir
This was a Roll-out on a position I got into on 1/22. It worked out well. I didn’t get assigned so I still own the stock.
Palantir Roll-out
1/22/21 – Sell to Open 10 PLTR 1/29/21 $33.00 C @ $1.00 (+$1000)
1/29/21 – Buy to Close 10 PLTR 1/29/21 $33.00 C @ 95¢ (-$950)
1/29/21 – Sell to Open 10 PLTR 2/12/21 $40.00 C @ $2.00 (+$2000)
2/12/21 – Expired 10PLTR 2/12/21 $40.00 C
Profit +$2050
NIO
This was the NIO Grasshopper trade. This is the only Grasshopper trade of the week that expired. This will also be listed in my Grasshopper Report.
2/2/21 – Sell to Open 1 NIO 2/12/21 $64.00 C @ $1.00 (+$100)
2/12/21 – Expired 1 NIO 2/12/21 $64.00 C
Profit +$100
Total Weekly Gain +$65,920
This was another great week. The only blemish on 2021 is Palantir. If the stock doesn’t start moving to get closer to my buy-in prices I go out a few months with the Expiration Date. I’m hoping to get a premium coming in this week. Let’s see what happens. If I get Palantir back to $45, and bring in premiums along the way, this will be a very good year. And I do love the stock! Earnings coming out this Tuesday. This will be a very important day.
Successful trading,
Steve
The Options Coach