Out of a Tesla LEAPS
Call me crazy, but I have a strategy. On Friday I bought 1 contract of the Tesla (TSLA) 1/15/21 $1650 Call for a premium of $320. Today the stock is flying! I wanted to hold until the split but I decided to lock in some profit. I just sold this LEAPS for $395. Thats a $75 profit. On the i contract the total profit is $7500! This is a 1 day trade.
8/14/20 – Buy to Open 1 TSLA 1/15/21 $1650.00 C @ $320.00
8/17/20 – Sell to Close 1 TSLA 1/15/20 $1650.00 C @ $395.00
Profit +$7500
Let’s take a look at the power of LEAPS. When I bought the Call option the stock was at $1650, when I sold the option the stock was at $1783. If I bought 100 shares I would have spent $165,000 and I would have made $13,300. That would have been a Return on Investment (ROI) of 8%. This is a great 1 day return but let’s take a look at the option. I paid $32,000 and profited $7500. That’s a ROI of 23.4%. Yes I would have made more if I spent the $165,000 but I like investing $32,000 and getting a return of $23.4%.
Besides my OXY loss, and even with the loss, I’m off to a great start to the week.
If you read my earlier post you saw I bought another 1 contract LEAPS on Tesla. This is one of the reasons I decided to lock in profit on this one. If Tesla continues to move up I’m stilling the game.
Successful Trading,
Steve
The Options Coach