Today we closed a short position in a put option contract (strike: $120; expiration: 15JAN2021) on Zscaler (ZS). The IT security firm reported earnings last night after the close and I failed to adjust my standing limit order after impressive results. Our limit order to repurchase the contract was established at $1.60/share shortly after we sold the position for $2.50 per share. Fortunately, after ZS jumped 25% near today’s open, our position was closed for $97.69. We were fortunate to be executed below our limit price; to the tune of an additional $60 or about 40% of our net on the trade. I am happy to have been so lucky on this trade. I’ll have to be more cognizant of earnings call dates going forward.
Assuming downside exposure to ZS for less than 24 hours netted $151.61 or 1.3% of the capital ($12,000) required to collateralize the position. The annualized return is astronomically high and not particularly meaningful.