This Monday I bought 1000 shares of RH at $81. Also on Monday I sold a 10 contract Call against these shares. On Tuesday I was able to Buy to Close this option position and keep over half the premium I collected (see Buy to Close RH). The premium was $1250. Today the market is doing great on optimism of an approved tax plan. My RH stock, which has no option attached to it, is up above $82.60. I just sold a Call to get started on next week’s profit. I sold 10 contracts of the RH 10/27/17 $85 Call for a premium of 1.25. This is a total premium of $1250 on a stock that is $2.50 Out-of-the-Money, and there’s only one week to expiration. As long as RH doesn’t tank, I love this deal. The premium is 1.5% Rate of Return on investment, plus if I get assigned I’ll make $4 on the stock ($4000). If I do get assigned the total return will be $5250. That’s fantastic! I’d love to get assigned and move on! This trade is a covered Call on previously owned stock so it’s a Risk Factor 1.
Sell to Open 10 RH 10/27/17 $85.00 C @ $1.25 (+$1250)
If this market keeps moving, a lot of people are gonna have a great year. Maybe Trump isn’t so bad!
Steve
The Options Coach