Trade Results - GPS

Trade Results - GPS

Hello Smart Option Sellers! Before I talk about the GPS trade, I want to say thanks to the sharp eye of a loyal Smart Option Seller member who alerted me to the mistake in the Issue # from yesterday's alert. I had the alert pegged as Issue #89, but it was really supposed to be #87. Thank you for bringing that to my attention. Today's alert is #88, and the real #89 will be soon enough! Let's go over yesterday's results from the buy-back trade. Gap, Inc. (GPS) We successfully closed out another profitable trade. If you had the GPS put-sell position already in your account, then you were able to get filled at my recommended price of $.06 per contract yesterday. Here's what we did: Bought back (bought-to-close) all of the GPS September 2017 $17 put options for an official buy price of $.06 per contract as a closing transaction (bought-to-close). Here's the final results: We originally established (sold-to-open) this put option on April 18, 2017 for a sale price of $.32 per contract, and now we took gains by buying it back (bought-to-close) for $.06 per contract. With the fill at $.06, it locked in a gain of $.26 per contract ($26 for every contract traded) and a return on margin (ROM) of roughly 7.6% in two and a half month's time. If you like to annualize, that's roughly a 36% return. Here's how the margin and profit return calculations break down: 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. If it helps you to understand the concept bett