About a month ago I bought 1000 shares of Weight Watchers (WTW) at $22. Since I bought the stock I sold Calls twice, bringing in a total of $900. I have not been assigned so I still own the stock. The stock has been hanging around the $20 – $21 area. This morning with the stock at $20.30 I sold another Call. I sold 10 WTW 4/12/19 $21.50 Calls for a premium of 30¢ or $300. I took a little chance because I bought the stock at $22 and I sold the $21.50 Call. If I get assigned I’ll lose $500 on the stock sale. I’m not really worried about it, because with today’s Call, I brought is a total of $1200 in premiums. With assignment I’ll still be ahead on this position.
Sell to Open 10 WTW 4/12/19 $21.50 C @ 30¢ (+$300)
This trade is a Covered Call so it gets a Risk Factor 1. It has 11 days to expiration and I am getting a 1.4% Rate of Return. That’s not too bad!
I own the stock for 1 month and brought is $1200 in premium. That’s about a 5.5% return on my investment. If WTW hangs around this area and I can continue selling Calls, what’s wrong with that?
For me trading options is all about the weekly or monthly return, NOT the annual return! With options I reprogramed my brain on the return on investment (ROI) I look for. If you want an annual return put your money in a CD or mutual fund.
Steve
The Options Coach