Profit Results

Profit Results Hello Smart Option Sellers! The market was having a very strong day yesterday, but proceeded to give lots of it back by the closing bell. Still ended in the green, but the sellers are still out there, so we need to stay vigilant during this existing volatility. We placed two buy-back trades yesterday, one of which had no problem being filled while the other didn't get enough contracts across the tape for me to call it official. Here's what we did: Hack Cyber Security ETF (HACK) Bought back (bought-to-close) all of the HACK June 18, 2018 $26 put options for an official buy price of $.05 per contract as a closing transaction (bought-to-close). If you had your order in yesterday, then you had no problem getting filled as the market remained at a $.05 offer throughout the whole session. Here are the profit details: We originally established (sold-to-open) this put option on January 2, 2018 for a sale price of $.27 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 $.22 per contract ($22 for every contract traded) and a return on margin (ROM) of roughly 4.2% in just over three month's time. If you like to annualize, that's roughly a 16% return. To understand how the margin works and the calculations involved, here's the breakdown: Whenever we sell an option contract, your broker will require you to maintain a "margin requirement". The margin requirement is made up of funds that are already in your account and will need to be held aside while the trade is active. You are not borrowing money from anyone nor are you paying interest to anyone. Some people can confuse the margin requirement with "trading on margin". They are completely different concepts. We are not "trading on margin" when selling put options (read my margin primer in the members-o