Happy mid-September! It was expiration Friday for the September monthly options, which brought 2 positions in Starbucks and Microsoft to a close - both put ratio spreads, with different (but profitable) results. I'll share how they played out.
$133 profit in Starbucks (SBUX)
$128 profit in Microsoft (MSFT)
$133 profit in SBUX
A while back I shared my put ratio spread in SBUX ($95/97.50 put ratio spread for $43 credit) 2 weeks ago I talked about the impact of volatility on my SBUX position. In that post I said I was hopeful that SBUX would end up between $95 and $97.50, which would allow me to make even more money than the initial $43 credit on the trade. Well, it happened!
As you can read from the post, I had to compromise and close my position for an additional $90 profit instead of $125. It's not always clear when it's a good idea to take profits - it's something I've developed a bit of a feel for after doing this for 11 years. At the end of the day I know I would be happier with getting that extra $90 in hand, rather than the “maybe” of $125. In all, this position made $43 from the initial credit, and an additional $90 from closing the trade for a total of $133 (or 3x the initial premium). You can read about the initial trade in SBUX at the link below.
$128 profit in MSFT
Another put ratio spread was placed in MSFT on the same day as the SBUX trade. The idea was just to provide experience in trading these for people in my course. I sold the $290/295 put ratio spread expiring Sep 15 for $128 and MSFT started rallying almost immediately. This means unlike the SBUX trade, there wasn't any opportunity to make extra money on the trade. However, it did mean I could leave this trade to expire worthless, which means I kept all $128 - or 100% of the initial premium.
I wanted to share these trades because it shows how flexible put ratios are. If the stock goes down like SBUX, you can make money. If the stock goes up like MSFT, you can make money too. This is why they are one of my favourite strategies and one I place a lot of emphasis on in my options course. Put ratio spreads do take a long time to come in. Both trades were placed on Aug 8, which was about 6 weeks ago. Regardless, people in my private community would have made $261 in these 2 trades alone, which would more than pay for the $49 subscription per month - not counting any other trades placed in the last 2 months. (And as you saw last week - August was a record month for profits)
Closing thoughts & useful links
This week was a quiet week and I didn't place any new trades.
However over $400 of profits were realised from closed trades this week (including those above) - sometimes it's about being patient and waiting for the right opportunity from the market.
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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.