A Review of my COST Call Option Trade
This is a trade review of my Costco COST call option trade.
- Why was I interested in COST? Because earnings was coming and I wanted to catch a price run up.
- Which way was COST trading? It was in a long upward trend.
- Was COST making an all-time high? Yes.
- When did you enter the trade and at what cost? I entered the trade on 3/5/2024. I bought 10 June 21, 2024 COST Calls for an average price of $7.53. Total cost was $7,545
- What was COST trading at the time of entry? It was trading around $764.
That was my entry. Now what about the exit? Why did I exit and not hold through earnings?
- Stocks that are trading at all-time high levels are just one earnings call away from sell off, that’s what happened to COST.
- I sold 5 contracts at market open for $12.41, which banked me $6,201. That was a little less than my initial risk.
- I sold the remain 5 contracts just before 3PM for $13.00. That yielded me $6,496.
Total profit = $12,697 on a $7,545 risk, roughly 1.68:1 reward to risk ratio.
Total holding time 2 days.
The question remains, was this a flawless trade or a lucky trade? Hard to tell because I’m still learning the options market but I used my chart and tape reading skills to figure out when to sell and followed my rules of not holding through earnings.
Costco Price Chart