This morning I sold 10 contracts on NFLX and got a premium of $1 for a total of $1000. As the last Call I sold, NFLX took a dip after I sold the Call. Last time, earlier in the week the premium went down to $.50. Today the premium went down to $.20. As it was going down I was debating buying the Call back or keep it because there’s only one day left but it went all the way down to $.20 so I paid the $200 to get out and lock in the profit of $800. This deal is over and I have a $200 profit in a few hours. The money is in my mattress! Here’s the buy order:
Buy to Close 10 NFLX 3/11/16 $100 C @ $.20 (-$200)
You never know what the stocks are going to do. I could have kept this Call until expiration tomorrow and probably made the entire $1000 but I locked in the $800 because you never know what happens tomorrow. The stock could go up big and I could sell another Call expiring next week. The way NFLX moves it could easily hit 100 tomorrow. If that happens I get to keep the profit on the stock. What ever happens, I locked in $800 and I’m happy!
Steve
The Options Coach