I’m taking a bit of a gamble but I think it’s a good bet. I own 2500 shares of RH which are at a price much lower than where I bought in. I own all 2500 shares at a average of about $100 per shares. I just sold 25 contracts of the $90 Calls for a premium of $1.75. On the 25 contracts the total premium is $4375. Since this Call expires tomorrow, it’s a great premium. This trade is a Covered Call on previously own stock. A Covered Call is the safest options play there is. However, this trade gets a Risk Factor 2. I give it a 2 because if I get assigned I take a big loss on the stock sale. Again, I’m in the shares at $100 and I sold a $90 Call. When I sold the Call the stock was at $85.70. I hope the stock does not get to $90 before tomorrow so I don’t get assigned. If I don’t get assigned I’ll keep my stock and I’ll keep the $4370 premium. That would be a great 1 day trade.
Sell to Open 25 RH 3/2/18 $90.00 C @ $1.75 (+$4375)
Let me explain why I made this trade and took the risk of getting assigned much lower than where I bought the stock.
There has been some confusion to when RH will report their earnings. Last week it was posted on some websites that they would report last Thursday. They never did! However, the fact that the earnings date was posted it caused some volatility in the options premiums. I received a $3 premium for a 2 day Call. This week it was posted again that earnings would come out this Thursday. Which is also causing some volatility in the options. I do not believe they will announce today! I located an email address to the financial office of RH and I sent an email asking when earnings would be released. Here’s my email and their response.
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Steve Cunningham<coachsjc@gmail.com>
I’m an investor in RH, can you please let me know when the next Corporate earnings will be reported?
Cammeron McLaughlin <cmclaughlin@restorationhardware.com>
We have not announced a date yet – we do so one week prior. We typically report Q4 results in late March. Thanks!
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I believe Mr McLaughlin know what he’s talking about. I think the nice premium I just received is as a result of someone posting that earnings will be announced today. I work with Charles Schwab. Schwab has it listed on their website that earning will tentatively be reported today. I do not believe this to be true. But the fact that some sites have the report listed to be released today, I believe is adding volatility. Will RH hit $90 by tomorrow? I don’t know! But if it did, it would be a big 1 day move without reporting earnings, even for RH.
Steve
The Options Coach