How would you like to collect a month’s worth of profits in just 10 trading days?
Let me show you how.
Recently, WDC sold off after a solid earnings beat…more due to fatigue in the tech sector then anything bad about the company. Then over the next weekend, the company entered into an arbitration with its flash memory partner Toshiba. They settled rather then go the court and WDC stock looked poised to move.
With that news behind the company, it was a great time to sell put options on WDC.
Now everyone knows I like to sell weekly options to collect cash every Friday…but, hey, sometimes there is more premium to be had in the monthly options. And that’s what happened with WDC.
In the first week of August, we sold Western Digital (WDC) August 82.50 “monthly" Puts for around $130 per contract or $390 for 3 contracts.
We expected to hold the position to closing on August 18th and capture the entire $360 of premium on expiration.
But 10 days into the trade, WDC stock price popped and we took profits and closed the trade by buying back our WDC August 82.50 puts for just $0.18 or $18 per contract.
Our 3 contracts sold netted us $336 for a monthly option position in only 10 trading days.
In closing the trade early, we locked in profit…avoided in any late swoon in the stock price … and collected a month’s worth of profits in just 10 days.
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.,,Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.