Hi readers! I hope everyone had a great Labor Day Weekend. I just returned home from a weekend at my daughter’s house near New Hope PA. Had a great time with my daughter, son in-law, my son and his wife and my daughter’s kids. There’s nothing like family!
I’m in a few trades that expire next Friday but this week I only have one item to report. The one I have to report is a big messy one! Not that there was a lot of money made but it was a long term trade because of Roll-Outs, so I’m happy it’s over.
The more dedicated readers of Main Street beats Wall Street might remember a trade that started way back in March with RH. The trade did not go well so I had to make an adjustment trade and the position continued to move against me. You might understand better if you continuing reading and follow the trades below. On 3/28/17 I sold a 15 contract Naked Call on RH. This was a 3 day Call. The stock was at $37.50 and I sold the $39 Calls. I received I premium of ¢90 for $1350 as you see below. Before this 3 day Call expired RH went on a crazy run. This is not good with a Naked Call. The stock went way up above $45. The Call I sold for 90¢ was now trading at $7.30. I brought in $1350 on the Call but it cost me $10,950 to close out the trade. I didn’t want to take this loss so I did a Roll-Out. With the stock so high I had to Roll-Out to August to get a premium to cover my loss, and it was only March! It cost me $10,950 to get out and I sold the new Call for $12,150. For a Grasshopper this can get very confusing. It will probably even get confusing for a long time trader. The bottom line is I did a few Roll-Outs and the premiums were getting crazy, as you can see below. What saved me is the stock finally came way down this week. It was all the way up to $80 and now it’s down to the middle $40. I got out of this trade on Tuesday 8/29. The stock finished the week at $48.50.With my last Strike Price at $50 and the stock $5 below that I was able to Buy to Close for the final time with a $1050 profit. There’s probably not too many readers that will understand the entire trade without doing a lot of investigative work into past post, but I’m posting it to let you know this trade is finally over. If you add up the premiums, both buying and selling, you will see I was able to end this mess in the black by $1050.
3/28/17 – Sell to Open 15 RH 3/31/17 $39 C @ 90¢ (+$1350)
3/31/17 – Buy to Close 15 RH 3/31/17 $39 C @ $7.30 (-$10,950)
3/31/17 – Sell to Open 15 RH 8/18/17 $40 C @ $8.10 (+$12,150)
6/22/17- Buy to Close 15 RH 8/18/17 $40 C @ $14.90 (-$22,350)
6/22/17 – Sell to Open 15 RH 1/19/18 $50 C @ $17.70 (+$26,550)
8/29/17 – Buy to Close 15 RH 1/19/18 $50 C @ $3.80 (-$5700)
Profit +$1050
Sorry for this confusing mess. I did what I had to do so I didn’t lose money. I hope I never have to do it again!
Total Weekly Gain $1050
Steve
The Options Coach
What about commissions on all those RH calls????
Hi Tony, Yes I don’t include commissions & fees in my trade reports. I used to snap a picture of my trade confirmation when I received it, which contained all fees, and include it is a post to be transparent but readers didn’t seem to care about seeing them. I stopped doing that to cut down on my work. I let the readers know fees would not be included in the trade post when I started Main Street beats Wall Street. I post the trade as soon as I make it so at this point I didn’t receive all the particulars about a trade. Everyone has different commissions & fees so if someone made a similar trade they would have to figure out what their fees would be. On options I pay 50 cents per contract,
plus commission & exchange fees. With this RH Roll-Out series I made 6 trades. The total fees for each trade was a little less than $15.
FYI, when I trade stock only, I pay $4.95 per trade for any amount of stock.
Steve