Common Cents sold its January 15 call option for $1.00. The option was purchased for $7.5. Let me tell you the story..
RH reported earnings after the stock market closed on December 10. During after hours, shares were trading at 94, which would have raised my option price to above $10. That would have been a great return! But then...
As the conference call progressed, shares started selling off. When the market opened the next day, shares were down, and my big profit turned into a loss. Rather than selling the option at my predetermined lower price, I waited. And I waited some more. And the stock went down. I violated my discipline that required me to sell the option after it decreased by a certain amount, and paid for it.
Lesson learned? Now that the year is complete, Common Cents will evaluate its options strategy and determine how to proceed with it going forward.
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