This is more of a lottery bet as I bought a CALL contract just before earnings and hope that a great earning result would cause the stock to go to the moon and it happened exactly. This stock is Meta, which beat analyst expectation on earnings and announced its first dividend payout, and it rose by more than 20%.
Trade Details
Since this is a short-term and higher risk trade, I decided to keep my capital low. Initially, I wanted to cater USD100 for this trade but the same type of bet placed two days ago on AMD failed. So, for this time round, I limit it to USD50.
I eventually settled on this USD40 trade:
BOUGHT 1 META Mar08’24 520 CALL @ 0.4
The max loss would be USD40 if the share price does not move as it will quickly expire worthless. As it turned out, Meta’s share price rose by more than USD80 and I closed this position at USD600, which translated to a 14x return.
SOLD 1 META Mar08’24 520 CALL @ 6
If you would like to view my trades as a reference, I share them on my Patreon page usually on the same day or on the following day.
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Concluding Thoughts
I made quite a lot of money in my first year of options trading by buying OTM CALL options, but I also lost a lot of money subsequently. So, I understand the risk of being an options buyer, with time being my enemy. Thus, for trades like that, I try to minimise the risk by having a small bet and using it on earnings which has a higher chance of skyrocketing the share price of a stock.
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