Grasshopper Trade with Pinterest
Today the market is not doing much but I’m having a productive day. I only made 1 Grasshopper Trade but I made a few other trades.
My Grasshopper Trade was with Pinterest (PINS). I like the way this stock has been moving lately so today I decided to make a 1 contract trade. With the stock at $63.50 I bought 100 shares. Also, I placed a trade to sell 1 PINS 5/28/21 $64 Call for a premium of $1. The stock moved up from my buy-n price but I wasn’t getting filled. I lowered my premium from $1 to 95¢, the stock went a little higher and I was filled.
Buy 100 Shares PINS @ $63.50
Sell to Open 1 PINS 5/28/21 $64.00 C @ 95¢ (+$95)
If I don’t get assigned I’ll just keep the premium which is 1.5%. If I get assigned I’ll make 50¢ on the stock sale. With assignment I get the 95¢ premium plus the 50¢ on the stock. This will be a return of 2.28%. With assignment this will be a very nice 4 day trade.
I was filled on a few more trades. You can see them on my Active Trades page but I list them below.
One I would like to talk about; I bought 500 shares of Huami Corp back on 1/4/21 at $12.50. On 2/25/21 the company made a name change to Zepp Health Corp (ZEEP). I sold a few Calls with this stock but it dropped and I haven’t done much with it lately. Today the stock is in the $9.70 area.
I know I’m due to write a report on actions that can be taken when a stock holding drops and you have trouble getting a decent premium. As soon as I have time I’ll get this report out. But this stock falls into this category. Like I said I bought at $12.50 and today the stock is at $9.70. Today I put this stock to work.
When your stock drops down a lot, to get a decent premium, you can go out further with your Expiration Date. I like selling short term options but sometimes you have to make adjustments to your strategy. With ZEPP I went all the way out to December 17, 2021. I sold 5 ZEPP 12/17/21 $12.50 Calls for a premium of $1.30 for $650.
1/4/21 – Buy 500 Shares ZEPP @ $12.50
5/25/21 – Sell to Open 5 ZEPP 12/17/21 $12.50 C @ $1.30 (+$650)
Is this a great situation? No! But I put the money to work that has been locked up in this stock. This is basically a 6 month trade. Not the situation I like, but I received $650. The return is 10%. And I received other premiums on this stock in the past. I look at this as getting a 10% return in 6 months (20% annually). Not what we look for but it’s better than the money sitting idle. It’s a pretty good way to make a bad situation better.
Other trades I made today.
Buy 200 Shares SHAK @ $91.15
Sell to Open 2 SHAK 5/28/21 $91.50 C @ $2.00 (+$400)
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Buy 1000 Shares NIO @ $36.50
5/25/21 – Sell to Open 10 NIO 5/25/21 $36.50 C @ $1.10 (+$1100)
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Buy 300 Shares SQ @ $113.50
Sell to Open 3 SQ 5/28/21 $215.00 C @ $1.70 (+$510)
Successful trading,
Steve
The Options Coach