This 3-Hour Trade Yielded a 107% Annualized Return

Last Week's Income Report: July 25, 2022

In the latest Options Income Weekly, I discuss last week’s results, recent market action and how we booked a triple-digit annualized rate of return on a trade open for a matter of hours.

In the previous Options Income Weekly, I discussed popular TV streaming platform operator Roku (ROKU) at length. Options Income Blueprint members had just booked a profit by buying back the put we sold early, which boosted members’ rate of return from a potential 29% annualized (had they held through expiration) to 51%.

Last week, I recommended another trade on ROKU hoping to repeat our recent success with the stock. This time, I told members to sell the ROKU Jul Week Four (7/22) 75 Put, which was nearly 13% out of the money, for $0.44, or $44 per contract.

Had we held through expiration and the put expired worthless, we would have made 0.6% in four days, or 54% annualized. But when we sold the put shortly after 11 a.m. Eastern on July 19, I warned members that this trade might be a bit unusual. I told them to watch for a closeout alert that could come within a matter of hours if shares of Roku continued to move higher that day.

That’s exactly what happened. Shortly before 2 p.m. Eastern, with ROKU up another 3%, the premium of the put we sold had been cut in half. I issued an alert to close the position and members booked a profit of $0.22, or $22 per contract.

Since they had put up $7,500 per contract to secure the trade, this meant they earned a 0.3% return on their cash in just three hours! This one-day trade yielded an annualized rate of return of 107% and we freed up capital for new opportunities.

We’re not day traders at Options Income Blueprint, but we’re also not the kind of traders who overlook an excellent profit in a matter of hours.

This week, I’ll be waiting until Thursday to put new money to work. I want to see how the market reacts to central banker comments and news of an interest rate increase that will come following the conclusion of the Federal Reserve meeting on Wednesday.

But even with the Fed meeting out of the way, I’ll have no qualms about continuing to book profits early. In this market, it pays to trade aggressively and nimbly while avoiding any unnecessary risks.

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jeffwood

On November 30, 2022

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