$75 profit in CLX
- themoneyloaf
- 1 day ago
- 2 min read
Happy Sunday!
Fresh off Friday's expiration, this trade update in CLX is one that went right to the wire, and shows why I try to wait as long as possible before rolling a trade.
This week:
$75 profit in Clorox (CLX)
$75 profit in CLX
Sometime in March, as volatility was picking up, I was eyeing CLX for a good time to enter a trade and finally got one. I sold the $105 cash-secured put expiring Apr 17 and received $125 in premium.
However as you can see from the chart below, CLX continued to drop through all of March and spent most of April below $105, which was not good for my position.
Leading up to expiry on Apr 17 CLX was trading at about $102 and I was already articulating the plan to roll the trade on Friday itself.
Unexpectedly, the market rallied hard on Friday morning, with CLX reaching as high as $106.52, past my $105 strike.
This huge jump coupled with just a few hours left in the trade meant that the extrinsic value left in the option shrunk exponentially and my closing order got triggered, closing the position for $50.
Even though I toyed with the idea of rolling CLX early, it was so close to the $105 strike that I didn't mind waiting all the way until Friday. And sometimes, the market bails you out, and that's not a bad thing.
It doesn't mean not having a plan, it just means following the plan and welcoming any help the market provides.
This trade (and all trades in this newsletter) are shared in close-to real time to my private community as updates in my own portfolio (not recommendations). If you're familiar with the basic mechanics of options, you can consider joining the private community to view these updates as well.
And of course the guidance for managing and closing both trades were posted to the community as well.
You can find out more about my private community at the link below.
Closing thoughts & useful links
Here we are in April at market highs again.
March was really good for placing new trades and hopefully most if not all of them get closed in April.
Now begins the new challenge of entering new trades amidst all the highs, for however long this lasts.
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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