Profit Results

Profit Update

Hello Smart Option Sellers! Let's go over some trade results. Emerson Electric (EMR) We held off on calling the EMR September $45 puts officially closed last week as only a handful of Smart Option Seller members were able to get filled on the buy-back order at $.05 per contract. But yesterday, anyone who was still waiting to get filled on the trade at $.05 has now been filled, and we will call this trade officially done with profits locked in. Here's what we did: Bought back (bought-to-close) all of the EMR September 2017 $45 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 May 3, 2017 for a sale price of $.20 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 $.15 per contract ($15 for every contract traded) and a return on margin (ROM) of roughly 1.67% in just over two and half month's time. If you like to annualize, that's roughly an 8% return. This was one of our smaller trades, but nonetheless still a winner. Here's how the margin 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. 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 $4,500 = $900. Your margin requirement at your broker may be slightly higher or lower. Ask them. So our margin requirement is $900 per each put option contract sold. Our pr