Hello!
In most of my trade updates, I usually close my positions for roughly 50% of max profit. The idea is to take profits and redeploy capital into a new trade, rather than trying to squeeze every dollar out of each trade.
However, with the market being in a period of relatively low volatility, I've been trying to squeeze a little bit more out of trades where possible.
This week's update features 2 such trades (coincidentally, both in tech).
This week:
$120 profit in Apple (AAPL)
$130 profit in Microsoft (MSFT)
$120 profit in AAPL
Over the first week of September, AAPL was going through a shaky time compared to the rest of the market - that provided a great opportunity to open a position, and I sold the $195 cash-secured put expiring Oct 25 and collected $160 up front.
The position actually hit my usual 50% profit target within 5 days, and I decided to get more out of the position and shifted my profit target to 75% instead.
As mentioned in the intro of the newsletter, I wanted to take advantage of the period of relatively low volatility that we're in, and sent an update to my private community that I'd like to squeeze a little more ROI.
From the screenshot, even though I probably could have taken it further, I decided I didn't want to risk my profits over the remaining $40, and closed the position.
A total realized profit of $120 (or 75% of max profit) in 10 days is a great trade and I'm very happy with it.
AAPL has performed really well in my portfolio in 2024 with 6 wins from 6 trades and $611 in realized profits. Hopefully this number will be even higher by the end of the year.
If you'd like to check out my private community for updates within my real options portfolio, check out the link below.
$130 profit in MSFT
A while ago I sold a $365/370/375 put ratio expiring Sep 20 in MSFT and received $130 in credit for the trade.
I really like put ratio spreads because you can kind of set them and forget them, and there's a potential to make extra profit (in this case up to $500) depending on how the trade goes.
The flip side of that is that they just take a long time for profits to come in, and in this case it took the entire trade duration from when it was put on to its expiry on Sep 20.
I should also say that this trade was put on as partially to demonstrate how the put ratio works for my June options course, and I think it worked out pretty well.
As you can see from the screenshot, all the options expired worthless and were removed from my account, which means this trade made 100% of the initial credit of $130.
The nice thing about put ratio spreads is that generally you get one of two good outcomes - the position expires with 100% profit or you actually make more money.
You can read about a previous example where I made 260% of the initial credit in AMGN at the link below.
Closing thoughts & useful links
The post-rate cut rally continues, with the S&P 500 making another record high this week.
Similar to “buy low, sell high”, I don't like entering option positions when the stock market is at a high. I'd much rather be patient and wait than enter sub-optimal positions and have to rescue them if the market drops when the next wave of volatility comes.
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.