Perfect trade in less than a week.

This winning trade (selling put options on Twitter (TWTR)) had plenty of room for error and we collected a lot of upfront cash for the risk. Today we can close this trade two months early for an outstanding annualized return.

Review the reasons for the trade here: https://staging.busy.org/@slider2990/7crgm5-option-income-twtr

A couple of days after executing this trade Twitter reported earnings and the shares took off like a rocket all the way to $41.52 at the close. Should earnings have been poor and the shares tanked we were protected since the put options strike price was $33.

With the favorable earnings for Twitter we can close this trade early and use our capital for more attractive positions.

Trade Details:

Buy to close Twitter puts for $0.15 or less using a limit order. You will have earned a net profit of $0.80 (2.4% return on purchase obligation) in a week for a 147% annualized return. During the next eight weeks you will only earn an additional 0.5% a measly 3% annualized return. With so little remaining return it the trade no longer makes sense from a risk return perspective.

Closing thoughts.

With hindsight it would have been more profitable to speculate on the earnings buying stock or call options however that type of strategy has no protection should Twitter have disappointed the markets.

The lower risk strategy of selling put options provided plenty of room for error with wonderful annualized return potential.

Congratulations now lets look for the next winning Option Income opportunity.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.