On May 20, I BOUGHT two call option contacts for a premium of $1.55 per contract for a Jun 19, 2015 expiration date and $74.00 strike price. On May 25, there was some positive momentum in the stock price, so I placed a limit order to close out the trade. I didn't want to get to greedy and took a small profit. The trade closed with a $1.72 per contract.
Initial Investment = 2 *1.55*100 + $11.95
Proceeds of Sale = 2*1.72*100-$11.95
Profit = $10.10
Return on Investment = $10.10/$321.95*100%
The profit of $10.10 is not that much when you first think about it. But if I was to get $10.10 in interest from my savings account, I would need a huge balance.
Current Interest rate = 1.05%
Number of days = 5
Balance = $10.10/(.0105/365 * 5)
Please note, I still own 25 shares of CNR that I recently purchased. I am keeping an eye on this stock for now as I like the prospects of this company going forward and new companies in the railroad subsector face huge barriers to entry.
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Disclosure: Long CNR
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.
Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.