Good morning readers, I just got out of a basketball coach’s meeting. The meeting started a little before the open and at the open (at the meeting) I made a trade.
I still have 100 share of RH. Last week I had 200 but I was assigned on 100 on Friday’s expiration. With my remaining 100 shares I sold a 1 contract Call to make a Covered Call. I bought the shares on 8/14 for $151. The Call I sold today was a 1 contract, $152.50 Call to expire this Friday. I received a $3 premium for $300. This is a very low risk trade so it gets a Risk Factor 1.
Sell to Open 1 RH 8/24/18 $52.50 C @ $3.00 (+$300)
For the loyal readers, you see I’ve been making a lot of Grasshopper traders. I consider a Grasshopper trade to be a low cost trade. This is a trade with the buying of 100 shares and the selling of a 1 contract Call. These Grasshopper trades I’ve been making are great trades for beginners to make. You don’t need much money and they bring in a nice profit. This trade above is making me a Rate of Return of 2%. What’s wrong with that?
The reason for all my Grasshopper trades is because I have a lot of money tied up in Facebook and Netflix. Both stocks are below where I bought and I’m having trouble selling Call against these shares. I do have a little money left in my margin account so I make the Grasshopper trades and bring money in.
I didn’t get to write my week ending report yet but my locked in profit for the week was $1620. Not bad for having most of my money tied up. Watch for my report.
If you have any questions on Grasshopper trades send me an email. For beginning options traders, this is a great way to get started. I might be doing another 1 contract trade with RH before the end of the day. While my money ie tied up I’ll try to live with small trades.
Steve
The Options Coach