“Buy to Close” My Short NVDA Call

Yesterday I sold a 10 contract Call with Nvidia (NVDA). The stock was in the $300 area and I sold 10 contracts of the 1/7/22 $315 Calls for a premium of $2. This gave me $2000.

Today the stock dropped a little after the open. The premium came down to 85¢. Since this stock is very volatile, and it’s only Tuesday, I decided to get out of the position for the $1150 profit. That’s a great profit for a 1 day trade.

 

1/3/22 – Sell to Open 10 NVDA 1/7/22 $315.00 C @ $2.00 (+$2000)

1/4/22 – Buy to Close 10 NVDA 1/7/22 $315.00 C @ 85¢ (-$850)

Profit +$1150

 

For you new traders I sold the Call for a $2000 premium and I did a “Buy to Close” spending $850 for a profit of $1150.

Why did I do this? I feel the stock will bounce back and I’ll get another Call sold to bring in another premium. If it doesn’t bounce all the way back I’ll look to sell a $310 Call and not another $315. The $310 will give me a larger premium.

The reason I didn’t sell a $310 Call in the first place is because when I sold the Call I sold it Naked. I have since bought 1000 shares of the stock to cover.

There are so many moves you can make when trading options. You must learn the mechanics of options before you work on your strategy.

Another reason for my move today is I love to lock in profit.

 

Successful Trading,

Steve

The Options Coach