GE rockets higher, 14% profit!
Today, the Fed shocked the market with it’s “no taper” announcement. I think they are trapped. The economy is not good enough for them to taper the purchases, but what if these purchases are partly the cause? What if the economy can’t get better until they stop the insanity? I think they want to stop the insanity, but now they are trapped into a box of their own creation.
To follow up on our GE trade string:
Today’s large market move has resulted in a large move upward for GE, now trading at 24.83. Yesterday, we did go ahead and sell another Oct 24 call at 65 cents, and then sold another earlier today for 75 cents. The current position is long 500 shares GE, short 5 Oct 24 calls. We have built a complete covered call position by selling one call at a time as prices increased. Our profit YTD on this position is now $785 or about 6%. Not great, but we are in a low risk position. For part of the year, this position was not actively managed so profits were not maximized. Let’s also remember that this position was built in April, so we have made 6% in about 6 months.
But, it’s really better than that. We have collected a dividend. In July, we collected $95. Profits are actually $785 + 95, or $880, and that’s since April. Let’s try the calculation again: $880/12415 (or 500 shares x 24.83) is about 7%. We have been in this position for about 6 months so our annualized profit is around 14%. Nicely done.
This is how we work here at DeepPocketOptions. We’ll have another update tomorrow, when we are due to go ex-dividend again. If we still own our shares in the morning, we will have collected another $95. If our short calls are exercised, we will be out of the position. Stay tuned.
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