Yesterday late in the day I sold 2000 shares of Micron (MU) to free up some margin. I love MU but I noticed something in the candlestick chart I didn’t like. However, I still love MU and I could be back in by the end of the day. I just wanted to watch for a day or so to see what it does. For that matter watch what the entire NASDAQ will do. As I write the NASDAQ is down $50 and MU is down 25¢.
With the money I freed up I bought 500 shares of RH at $68. Today with RH up I just sold 5 contracts of the 7/7/17 $69 Calls and received a $1 premium. This is a 2 day option for a return of 1.4%. As I write RH is up to $68.80. If the stock goes above my Strike Price of $69 and stays until the close tomorrow I’ll get assigned. If assigned I’ll make an additional $500 on the stock. If you follow me and Main Street beats Wall Street you know I like to get assigned. If I get assigned my Rate of Return on this trade will be just under 3%. I love deals like this!
This trade is an option I sold on shares I bought yesterday which makes this a Covered Call. The trade gets a Risk Factor 1. Here’s the option order:
Sell to Open 5 RH 7/7/17 $69 C @ $1.00 (+$500)
As I’m finishing up this post RH just went over my Strike Price and is at $69.10. Anything can happen but right now this trade is looking good. Watch and see what happens.
Steve
The Options Coach