A Review of my COST Call Option Trade

Is option trading this easy? Probably not, I just got lucky.

A Review of my COST Call Option Trade
Photo by Omar Abascal / Unsplash

This is a trade review of my Costco COST call option trade.

  1. Why was I interested in COST? Because earnings were coming and I wanted to catch a price run-up.
  2. Which way was COST trading? It was in a long upward trend.
  3. Was COST making an all-time high? Yes.
  4. When did you enter the trade and at what cost? I entered the trade on 3/5/2024. I bought 10 June 21, 2024 COST 800 Calls for an average price of $7.53. Total cost was $7,545
  5. What was COST trading at the time of entry? It was trading at around $764.

That was my entry. Now what about the exit? Why did I exit and not hold through earnings?

  1. Stocks that are trading at all-time high levels are just one earnings call away from sell-off, that’s what happened to COST.
  2. I sold 5 contracts at market open for $12.41, which banked me $6,201. That was a little less than my initial risk.
  3. I sold the remaining 5 contracts just before 3 PM for $13.00. That yielded me $6,496.

Total profit = $12,697 on a $7,545 risk, roughly a 1.68:1 reward-to-risk ratio.

Total holding time 2 days.

The question remains, was this a flawless trade or a lucky trade? Hard to tell because I’m still learning the options market but I used my chart and tape reading skills to figure out when to sell and followed my rules of not holding through earnings.

Costco Price Chart