This is my third of four posts about my experiences diving into option trading. In my first post, I discuss how I’ve been investing for a few years and wanted to dip my toes in the option trading market. My second post was about the MSFT roller coaster, and how I managed to earn a 30% return in a week. Coming off of that high, I really think option trading is for me.
I understand how the mechanics work, but researching good opportunities is still an open field. How do I find these options to invest in? Should I just keep investing in MSFT over and over again? This time, I decided to look for companies that were about to have an earnings call. My thought was increased scrutiny of a stock around earnings season creates extra volatility, which leads to greater options returns. Checking online, and plugging various options into my custom built option pricing spreadsheet, I found Royal Caribbean cruise lines (RCL) and decided to put in a buy.
So, Monday morning rolls around and my buy option executes. Last time, the prices would fluctuate constantly, so I decided to put in a limit order. Essentially, I put in an order to sell high above what it is trading at now. I don’t expect it to execute, but if the price rises I can get out quickly and lock in a profit.
I put in my order, thinking that there is no way this will execute today. My routine is that once I put in an order, I go look at the order status to make sure everything was entered correctly. By the time I got to order status (maybe three seconds after I sent in the order) it had already sold. I couldn’t believe it. I made a 15% return with about 10 minutes of effort.
I am the king!
I have figured out how to print my own money!
In next week’s episode, pride goeth before the fall.