On Wednesday, April 7th, our short position in a DataDog (DDOG) put option contract (strike: $65; expiration: 21MAY21) was closed to net nearly $50 two days after it was established. Though we only netted a 0.7% return on our collateralized capital it was a quick profit and I sold another DDOG put option contract along with five other options on 7APR21. Our new exposure to DDOG is through a contract with the same expiration date but a strike five dollars higher.
DDOG shares traded for less than $83 on 5APR21, when we sold the newly closed contract, and traded up significantly between the day of initiation and closure. On 7APR21, when we initiated the new DDOG contract, DDOG traded around $88.60. Today, 9APR21, our new strike, $70, is still 19% below the market.
April 8th saw three of our option contracts close: an AppHarvest (APPH) covered-call and two cash-covered puts – on BlackLine (BL) and Fastly (FSLY).
The APPH call (strike: $20; expiration: 16APR2021) was an aggressively priced order to liquidate recently acquired shares. Our APPH shares were distributed via a cash-covered put I had sold and I’d like to move our exposure to APPH to tax-exempt accounts.
The BL contract (strike: $90; expiration: 21APR21) netted $143.62, or 1.6% over 15 days. BL is a recommendation from one of our newsletters and we took advantage 7% drop in shares and subsequent recovery.
Source: MarketWatch.com
The FSLY put option contract (strike: $55; expiration 7MAY21) was a very aggressive closure that netted just $38.63. We held it for just one evening and it returned 0.7% on our $5,500 collateralized capital. Because we also hold 200 shares I wanted to limit our exposure and the annualized returns for this trade were more than 250%.
Today, our short position in a covered-call option contract (strike: $210; expiration: 21MAY21) on Appian (APPN) shares was closed to net $78.62. I’d like to liquidate part our exposure to APPN but I’ll take the nearly $80 and sell another covered-call option contract after APPN shares rally. We held the short exposure to the APPN contract for nine days and expiration was six weeks away. By holding the short exposure to the contract for 20% of time from initiation to expiration we earned 49% of the contract premium. We’ll sell another APPN covered-call option contract when the market presents a profitable opportunity.