In a previous post, I explained how I used an easy option trading strategy to trade around an earnings report. Today I will show you how I took profits.
On November 27th 2018, Salesforce.com, (ticker CRM) reported earnings. Typically, you can expect is a lot of volatility before earnings, and sometimes the volatility is still there for a few days, as investors try to make sense of what the report means for them. The price of the options is typically elevated, on both the call and put side.
Salesforce.com Earnings Report
The earnings reported were 61 cents per share, which was higher than earnings reported 1 year ago of 39 cents per share. Salesforce.com reported an increase of revenues of $3.39 billion, an increase of 26% year over year. When the market opened, the stock popped up to a little over $139 a share and started to drift downward as traders tried to absorb the results.
I sold a 5 strike wide Iron Condor for $154, and yesterday I closed the position, for 50% of what I sold it for. I bought the iron condor back for $76. When I sold the iron condor, the January options were 51 days until expiration, and when I closed the position, there were only 15 days until expiration.
Because I invest with a Tastyworks, I didn’t pay any fees to close this iron condor. Low fees mean I get to keep more of my money, and that alone can be a huge increase in any stock option traders income.
So you can see that I held this position for 36 days, and I basically just waited for time decay to work with me. A lot of people prefer to buy options, picking a direction either up or down, and hope that the value of their options increase. It is much more profitable to learn stock options strategies like verticals and iron condors and become an option seller rather than a buyer.
You can see from the chart below that it has been a heck of a ride for CRM over the last 36 days, as the stock market in general has been pretty volatile. But in the end, CRM is pretty much around where it was a little over a month ago, and I was able to profit from this trade.
Anybody can learn one or two easy options strategies and make a lot of money. It isn’t really hard, and it doesn’t cost any money to open an account at Tastyworks. Tastyworks is the best brokerage for options trading, because they keep their fees extremely low, and provide continuing education for their customers. You can actually open an account for no minimum deposit, and start investing when you feel comfortable with as little or as much as you like.