Sold to Close My Tesla Long Call

On Monday, three days ago, I bought 1 contract of the TSLA  12/27/24 $355 Call. The premium was $18.50 so I paid $1850 for this position. This morning Tesla was up $15 and I had a nice profit so I sold to close the position. I received a premium of $28.50 for $2850 giving me a $1000 profit. What a great three day trade! My Return on Investment (ROI) is 54%. This is the power of options. Invest a small amount of money and make a high percentage on that investment.

12/2/24 – Buy to Open 1 TSLA 12/27/24 $355.00 C @ $18.50

12/5/24 – Sell to Close 1 TSLA 12/27/24 $355.00 C @ $28.50

 Profit +$1000

When I bought this position Tesla was at $355 per share. If I wanted to buy 100 shares of the stock it would have cost me $35,500. When I sold my option the stock was at $373. If I bought the stock at $355 and sold the stock at $373 I would have profited $18 per share for $1800. The ROI doing the trade this way would be 5%.

What would you rather do, invest $35,500 for a profit of $1800 or invest $1850 and profit $1000? Doing it with options I invested less, had less at risk, and had a ROI of 54%.

When investing the way I did it, with options, you must understand the importance of the Expiration Date you choose and know exactly how Time Decay works. Once you understand Time Decay you understand you cannot hold the position too long, don’t get greedy! If the stock is not moving up and you hold for a better profit, every day that goes by is decaying the Time Value of the premium, which is where your profit is.

 

Successful trading,

Steve

The Options Coach