Today is not a good day for the market to start the year but I’m getting some work done. Earlier I sold a Long LEAPS option I was holding with Tesla. This was my 1st trade of the year and it gave me a whopping $5000 profit. You can read about the trade at 1st Trade of 2021.
Over the weekend I start my Grasshopper section I call “The Grasshopper Field.” Please read all pages. “The Grasshopper Field” is my commitment to teaching new traders with, what I call, Grasshopper Trades. As my account grows my trades get bigger. A lot of new traders are having trouble learning and staying interested when my trades are too big. I decided to start “The Grasshopper Field” to make smaller trades and stick with my original mission of teaching new traders.
A little while ago I made my 1st Grasshopper trade. These trades will be listed on my Grasshopper Trades page. In addition, it will also be listed with all my trades on my Active Trades/Current Positions Page.
Today I bought 100 shares of Palantir at $23.75. I was up in the air whether to sell the $24 Call for 90¢ or go with the $24.50 Call and try to get 75¢. With the $24 I’d make more of a premium and less if assigned. And with the $24.50 I take less of a premium but make more if assigned.
I like Palantir at this price and I think it will go higher so I sold 1 PLTR 1/8/21 $24.50 Call for a premium of 75¢.
Buy 100 Shares PLTR @ $23.75
Sell to Open 1 PLTR 1/8/21 $24.50 C @ 75¢ (+$75)
Buying the 100 shares cost me $2375. I brought in a $75 premium. This might not sound like much but remember it’s not about the amount of money you bring in, it’s about the Return on Investment (ROI). This 75¢ is a return of 3.1% for a 1 week trade. And if I get assigned, which I hope I do, I’ll make another 75¢ on the stock sale for another $75 gain. If assigned I make a total of $1.50 on a $2375 investment. That will be a return of 6.3%.
This trade gets a Risk Factor 1.
This trade in a true Grasshopper trade! Buying these100 shares and selling 1 contract can be a profit of $150. But if you buy 200 it’s $300, or 300 shares for $450. It’s all according to the size of the account. Either way it’s a ROI of 6.3% in 1 week.
Good luck! Please let me know what you think of “The Grasshopper Field.”
Successful trading,
Steve
The Options Coach