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Trade Updates

Trade Updates

Hello Smart Option Sellers! Lots to talk about today. Gap Inc. (GPS) We placed an order yesterday to take profits on our GPS put-sell position. I'm happy to confirm that it was completed successfully. Another win locked in. Here's what we did: Bought back (bought-to-close) all of the GPS June 2017 $15 put options for an official buy price of $.05 per contract as a closing transaction (bought-to-close). We originally established (sold-to-open) this put option on January 31st for a sale price of $.28 per contract, and now we took gains by buying it back (bought-to-close) for $.05 per contract. With the fill at $.05, it locked in a gain of $.23 per contract ($23 for every contract traded) and a return on margin (ROM) of 7.6% in two month's time. Short and sweet, just the way we like it. For those of you who need a refresher on margin - let me explain. Whenever we sell an option contract, your broker requires you to maintain a "margin requirement". The margin requirement is just part of your account funds that need to be held aside while the trade is active. You are not borrowing money from anyone nor are you paying margin interest to anyone. The margin requirement is typically 20% of what it would cost to buy 100 shares of the stock at the strike price. In this case: 20% x $1,500 = $300. So our margin requirement is $300 per each put option contract sold. Our profit on this trade is $23 for every contract sold. The return on margin (ROM) comes out to $23/$300 = 7.6% in two month's time. If you like to annualize: that's a cool 46% return. The fill at $.05 also allowed us to capture 82% of the full profit potential ($.23 gain/$.28 full potential = 82%). We like to close trades early before option expiration when we can capture at least 80% of the full profit. It's called my "80% Rule," and it's just smart trading. It's also a great way to preserve capital to employ towards a new trade. If you haven't closed this trade yet, or didn't get a chance to place your order yesterday, you should have no problem getting filled at the same prices. Great job, everyone. Second successful trade under our belts. Bet sure to let us know how you did. You can reach us here. Lululemon (LULU) As mentioned in last night's alert, LULU certainly gave us the large move we wanted. As I type this morning, it's fallen even further. Right now it's down about $13.80 per share at its current price of $52.50. If you opted into the unofficial trade and bought put options, you will have an opportunity to cash in pretty good this morning. The few messages I received so far from some of you is that you purchased the puts with strike prices ranging from $58.50 to $60.50. Those options were trading around $.30 & $.60 per contract respectively near the end of trading yesterday. Based on pre-open numbers this morning, they will be worth at least $6.00 & $8.00 per contract respectively. That's a return of 13 to 20 times your money (1,300% - 2,000% return). Depending on how many contracts you bought, profits could range from hundreds of dollars to tens of thousands of dollars. For today, my suggestion is to lock in a majority your gains (if you have them) because you never know if the stock might pop back up. Even still, If you bought multiple contracts, I would leave one or two of them open for tomorrow as the stock could slide even further and offer more gains. But remember, expiration day is tomorrow, Friday March 31st, so make sure you're completely closed out of all contracts by then. Let us know how you fared if you got involved. You can contact us here. Looks like it'll be a pretty good day. Regards, Lee Let's Grab That Cash!


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