We had a pretty strong rally for most of the week, but the market still feels pretty fragile. That means when opportunities appear to take profits, we take them and run.
This week:
Closing Nike & Starbucks for $100 profit
Trade update: SCHD
Closing Nike & Starbucks for $100 profit
Last week I shared the Nike (NKE) trade that was put on immediately after earnings. With the market rallying hard on Monday and Tuesday, my 50% profit target was hit and we were out of the trade the second the market opened.
Similarly in Starbucks (SBUX), we sold a put at the $77.50 strike expiring 21 October for $89.
That also got closed first thing on Tuesday morning for 50% of max profit.
I could definitely have held on to them longer and tried to get more profit out of them, but we're still in a bear market so when rallies come as hard as they did on Monday and Tuesday, you have to take advantage of them and take some profit off the table. It frees up capital to be used during the next bout of volatility. In case you missed it, here's the full details of the Nike trade entry last week
Trade update: SCHD
This position was registering a -$30 loss last week, we're up to a +$10 gain.
However that only tells half the story, because I had the opportunity to close this position for 50% profit as early as Wednesday and didn't take it. If I did, I would be double dipping in SCHD this week.
There were a couple of reasons for not taking the trade off:
First, after closing NKE and SBUX, my portfolio is really light on positions, I didn't want to close everything too early.
Second, I do want to average down on my position, since I already have 100 shares of SCHD at $78. I talked about this when I put the trade on last week.
I mention this just to illustrate that even though I have a framework for managing and exiting trades, there are times where I'll exercise some flexibility depending on my original reasons for entering the trade.
This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.