I made $1,900 profit today on a NFLX debit spread options trade :
chart below with notes double click it to see notes larger:
wanted to review this NFLX trade & the option plays i took this week -- as you know i sold NFLX stock the other day for a loss. I was willing to only lose another $1,600 when i did sell to a $90 breakdown. sold at $94.43/$94.36 So had a talk with Jeff & MMassassin in the chat. They suggested i put $1,600 to work on an advanced option play So what we came up with was . we knew $100 would be a key level so I bought $100 calls ( 10 of them ) @ $1.65 - sold them this a/m at $2.37( $720 profit) could have got more at the open Initially only did the $100's and was going to sell them then MMassassin suggested instead of selling them to sell higher up calls and protect my profits so he suggested selling the Jan $105's So I sold $105's Jan calls (10 of them) to protect the $100 calls profit so took in $1.48 ( in essense giving me a debit spread) .. most i could lose now was the $1.65-$1.48 = .17 less commissions on the 10 calls I bought back the $105's this a/m at .30 so made $1,180 profit In total made on $100 calls $720 profit on $1,650 investment so 43.64% ( at most this a/m was up $3,250) on the $105's that i sold i made $1,180 profit or 79.73% if NFLX did not close over $105 today i could make at most $1,480 less commissions) Net on the debit spread was $1,900 ( 43.64% and 79.73%) so reduced my overall loss on NFLX from $14k - almost $12k but i had less at risk going into this Friday MMassassin noted if this move over $100 happened earlier in the week I would have had approx a $5k-$6.5k profit but worked out so happy with it - In future I'll get MMassasin & Jdub929 to explain these plays in more detail since i found it very helpful) message @jdub929 or @mmassassin on twitter if you have any questions on this strategy.
Hope you find this helpful,