Earlier this week I sold 100 shares of Principal Financial Group (PFG) stock. The contract was assigned as part of an option I wrote a few months back. A contract buyer chose to close the contract early, before the stock’s Ex-Date. Bummer for me, PFG shares went on a really nice gain right after the sold the covered call.
The bad news is that I sold 100 shares at a strike price of $50 dollars. PFG was trading at $61.98 at the contract closure. The good news is that I bought the same 100 shares at a cost basis of $36.40 per share. I made $1,360 on this trade. I was also paid a premium of $491.54. My total profit from this transaction is $1,851.54.
Had I sold the shares and not an option, I would’ve profited $2,558, which is $706.46 more than I made on this transaction. One way to look at this is as a loss. Another way to look at this is as a nice profitable trade; making $1,800 on a stock I held for one year isn’t bad. I view this as a profitable trade, because I average more money than this on a monthly basis selling options. I cannot win every option contract, but I do win more than 90% of the time ;-). I’m bound to be on the losing end of some transactions.
The other good news is that I now have $5,000 sitting in my Roth account. I can buy a different stock or sell cash secured puts with this cash. I haven’t decided what to do today.
Have you sold any stocks lately?