Selling Put Option and Make $1000 a week Trade Journey #2 (Profit of $1341.5)
Closed Trade:
TSLA: 10 Nov 27 475/480 Put Vertical P 0.46
PINS: 5 Nov 27 63 Puts P 0.65
Open Trade:
TSLA: 5 Nov 27 490/495 Pu5 Vertical P 1.1096
Current Position:
TSLA: 5 Nov 27 490/495 Pu5 Vertical P 1.1096
DOCU: 10 Nov 27 205/210 Put Vertical P 0.9696
TSLA: 102 shares
As I just traded for the last week, there was a significant move on Tesla.
Tesla was up from $489 on last Friday closing bell to $520 this morning.
It made a premium to be 0.46. I have to wait another 4 days to collect 0.46, but due to Tesla has been upgraded with JP Morgan of $530, I am a bull on Tesla. Therefore, I buy back the 0.46 premium and sold for the higher premium of 490/495 Vertical Spread for 1.1096 with the risk of 3.8904.
You can calculate the risk by how much the spread minus(-) the premium. In this case, the spread was 495 - 490 = 5 and the premium was 1.1096 therefore the risk was 3.8904. Of course, it will not 100% sure for this risk, it actually can go higher or lower depending on the actual stock price. But generally, this is the risk I am bearing.
I have bought back the Pines not mean because it was a bad stock. It is because of the nature of the naked put. It takes too much of my buying power. I do not use margin in this account so if I naked sell of 5 contracts, it is the same as I am selling 500 shares of PINS stock. It is a margin of roughly $30,000. I wanted to free up the margin, so I actually bought back the stock. In a near future, I might vertical put for the PINS.
Since the money was made for roughly $1300, I will buy 2 stocks of Tesla tomorrow when the margin requirement is ready.
Profit was calculated based on closed trade. Open trade I generally do not calculate unless I made a loss (when I buy back or sell the stock). In between, it is just the market movement.
In last Friday to today, for
Tesla: Sold for $1.6895 and bought @ 0.46 of 10 contracts.
Profit of: (1.6895 - 0.46) * 10 contracts * 100 ( shares) = $1229.5
Pines: Sold for $0.8748 and bought @ 0.65 of 5 contracts.
Profit of: (0.8748 - 0.65) * 5 contracts * 100 (shares) = $112.4
Total of $1341.9 for the closed trade profit.
This trade took place on 8-9 am PST 11/23/20
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I am not a financial advisor. Any trades listed are my own personal trades and meant for educational purposes only.
Option trading bears high risk and high return strategy for beginning trader.