$145 profit in ITW
- themoneyloaf
- Aug 28
- 3 min read
Updated: Aug 30
Happy Sunday!
ITW is a stock I don't trade too often, just because opportunities don't seem to pop up as regularly as other stocks.
In fact my last trade in ITW was in 2023 - but regardless, when an opportunity comes up, I'm ready to grab it.
This week:
$145 profit in Illinois Tool Works (ITW)
$145 profit in ITW
ITW reported earnings towards the end of July, and the market initially didn't like what they had to say, which made the stock drop nearly 3%.
This was the perfect opportunity to jump in with a trade, and I sold the $240 cash-secured put expiring on Sep 19 for $245 in premium up front.
I did enter this as a bonus trade, which means it doesn't fully meet all my usual criteria for a trade, but is probably still worth taking the risk. The specific reason for this was a low open interest, which can make it difficult to close trades (which thankfully wasn't an issue here).
Unlike last week's update in TXN where the stock more or less traded sideways between entry and exit (the 2 white arrows), in ITW you can see that it rallied pretty hard after earnings from a low of about $251 to $260-ish.
This strong rally meant that my put option lost value quite quickly, and my closing order to buy back the position for $100, was hit just 9 trading days later.
This resulted in a realized profit of ($245 - $100) = $145, which is about 60% of max profit.
Once again comparing to last week's ITW trade, you can see I was more conservative on this trade, choosing to take it off at 60% of max profit vs 67% in the TXN trade.
The reason for this was that ITW was already a “bonus trade”, so it wasn't a trade I wanted to leave open for too long - even though I did get more than my usual 50% profit target on the trade.
Part of managing a portfolio with multiple positions means knowing when to take profits early and when to let some trades run. I don't claim to be an expert, but it's been working for me so far.
As always all the trades within this portfolio are updated in close to real-time to my private community (not recommendations). While I do share my own profit targets, they can of course be adjusted to meet your own risk profile as well.
You can find out more about my private community at the link below.
Closing thoughts & useful links
The market rallied (again) with Fed chair Powell's comments on Friday, pushing the VIX down to 14.22.
A low VIX is a bad environment for option selling, so I'm holding back my capital and being patient. That said, the opportunities for 2 trades did appear this week, and I grabbed them quickly.
As always, I'll update their results as the trades progress.
Have a good weekend!
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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.
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