I purchased WBD at @ $24.34 on 11/10/2010 and have watched it rise to $32.65 as of today. Of course I have sold options across this whole time frame. As of today, I have gained 33.77% on WBD. A call option that I sold in early Jan. has now become profitable and my indicator is telling me to buy it back as of Friday. So here is the transaction:
01/06/2011 Sell to Open 3.0000 WBD 04/16/2011 30.00 CALL WIMM BILL DANN FOOD $30 EXPIRES 04/16/11
Details $4.47 per share (That is $1,338.71 back into my account after commisions)
02/28/2011 Buy to Close 3.0000 WBD 04/16/2011 30.00 CALL WIMM BILL DANN FOOD $30 EXP 04/16/11
Details $2.75 per shares (That is an expense of -$836.22)
So if I sold a contract for $1,338.71, then bought back the contract for $836.22 giving me a profit of $302.49. That was for two months of waiting and a percentage return on my option of 38.5%.
When played right options can be very fruitful in adding more money to a trading account to buy more shares of stock at the right time.
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