Out of My RH Long Call

Earlier in my post I talked about my Long Call I bought with RH. RH is a splitting stock and I’m using my split strategy to take advantage of the volatility and the movement a stock makes when they announce a stock split. RH does not have a split date yet but they announced they will be making a 3:1 split in the 2nd quarter.

Yesterday I bought 1 RH 6/17/22 $330 Call for a premium of $32. Today the stock is on the move and it got up as high as $350. When the stock was at $344 I placed an order to Sell to Close my position for $43. This would give me an $1100 profit in 1 day on the 100 shares the 1 contract represents. When the stock got up to $350 I was filled on my order at $43.

I was only in this position for 1 day, and it would not have expire until 6/17, but I placed the order at $43 which gives me a nice profit. Yes I could have held because of the time I had left until expiration but with options, and a volatile market, you never know what can happen. If the stock took a $50 drop I’d be stuck in the position as my Time Decay kills me.

Now if there is a drop I’ll be ready to jump back in. If it doesn’t pull back I jump back in at a later date with an Expiration Date out a little further. Either way I locked in $1100 in 1 day.

 

4/18/22 – Buy to Open 1 RH 6/17/22 $330.00 C @ $32.00

4/19/22 – Sell to Close 1 RH 6/17/22 $330.00 C @ $43.00

Profit +$1100 

 

This $1100 profit is on a $3200 investment. This is a return of 34.3%. I’ll take it for 1 day.

Any question on my split strategy send me an email.

 

Successful trading,

Steve

The Options Coach