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Writer's picturethemoneyloaf

$85 profit in IWM

Happy Sunday!

 

One quick trade update this weekend, this time in IWM - the ETF that tracks the small-cap stocks of the Russell 2000.

 

ETFs are great for option trades because they're generally less volatile, and don't have the inherent risks of individual stocks. 

 

But that also means they don't always have enough premium to make the trade worth the risk. 

 

In this particular trade, IWM presented the best of both worlds for a straightforward trade. 

 

This week:


  1. $85 profit in IWM


 

$85 profit in IWM


On Oct 10, the market had a very slight increase in volatility, and I decided to enter a trade in IWM.

 

I sold a cash-secured put at the $195 strike expiring Nov 22, and received $170 in premium up front for this trade. 

 

If you look at some of my other screenshots of trade updates from past issues of this newsletter, sometimes I explain why I'm entering a certain trade. 

 

Since this was a very straightforward trade in an ETF (ie it doesn't have the considerations I might have with a stock, like earnings) - it just ticked all the boxes for my entry criteria. 

iwm-option-trade-details

As straightforward as the trade entry was, the profit-taking was just as straightforward. 

 

The position hit my profit target on Monday, which meant the entire position was on for just 3 days. 

 

I paid $85 to buy back the trade, which led to a realized profit of $85, or 50% of max profit. 

iwm-option-trade-profit

Given how light the portfolio is at the moment, I was considering holding on for a little more profit. But in the end decided against it because of how some other positions in the portfolio were playing out. 

 

If you'd like some insight into how I think about managing individual option positions and my overall option portfolio, you can find out more at the link below. 



 

Closing words & useful links


The S&P 500 making another record high this week, marking 6 straight weeks of gains.

 

As I said a few weeks ago,  I don't like entering option positions when the stock market is at a high, so patience is once again the name of the game. 

 

Have a good weekend!


 

 

  • Improve your financial life with my budget and wealth tracker that helps to allocate your budget, calculate savings rate, track your sinking funds, net worth and progresses towards FIRE with minimal input from you - most of it is automated. 

 


Just a reminder that this newsletter is set up to receive replies - so if you have a question or comment, feel free to hit reply and send it over or drop me a DM on Instagram. 


 

This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.

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