Results Week Ending 11/18/22
On Monday I bought 100 Shares of Lululemon (LULU) at $356 per share. Along with owning the shares I sold a 1 contract Call Option. I sold 1 LULU 11/18/22 $362.50 Call for a premium of $6 for a total of $600.
On Wednesday the stock dropped and the premium went down to $1.40. With 3 days remaining to the week, and dealing with a volatile stock, I decided to do a Buy to Close and close the position. I sold the option bringing in $600 and spent $1.40 ($140) to close the position for a profit of $460. My thought was since LULU was a volatile stock it would fluctuate back up so I would be able to sell another Call bringing in another premium. On Thursday the stock moved up a little and I had an order in to sell the next Call for a premium of $4.40 for the same option I originally sold. It got very close but I never got filled on the trade. The stock dropped back down, and with Time Decay working against the premium, I was never filled and the week ended.
I ended up making $460 on the week. If I never did the Buy to Close I would have made $600. And of course I didn’t make money on the stock sale because I was not assigned. The result is I keep the premium and I keep my stock. I will try to sell another 1 contract Call on Monday.
11/14/22 – Sell to Open 1 LULU 11/18/22 $362.50 C @ $6.00 (+$600)
11/16/22 – Buy to Close 1 LULU 11/16/22 $362.50 C @ $1.40 (-$140)
Profit +$460
Total Weekly Gain +$460
When I entered this trade I was hoping to make $600 on the premium and get assigned for another $650 on the stock sale. Sometimes things don’t work out the way you planned. However, I did make $460 on the trade which is a Return on Investment of 1.29%. Any time I make over 1% on a 1 week investment I’m happy.
If you have any questions on this trade send me an email.
Successful trading,
Steve
The Options Coach