Understanding Profiting From Rolling In-The-Money Options In AT&T Stock (T)

As I was updating some of the Tomorrow’s Trade Portfolio returns I found one trade from October 5 particularly interesting.

On October 5 I sold put options in AT&T Stock right at the height of the most recent rally, $39.80. The following day the stock began a collapse which eventually ended with an 18.2% decline by Nov 6. The stock hit a low point of $32.55 on that day. My short put options were deep in-the-money. Yet through the entire downturn my profit increased 473% from the original amount made. All of this was possible because of understanding how to profit from rolling in-the-money options.

AT&T Stock Chart

Selling Options For Income

My primary goal is to sell options for income. To do that means I have to risk my capital and even in the very best of circumstances, that can often mean a trade I am in will see the stock collapse. The stock market is among the riskiest of assets to invest hard-earned capital in. It is also the only place where the average investor can make large returns on a consistent basis. To do that though means understanding strategies of how to protect capital that is being risked while staying focused on growing that capital. The trade in AT&T Stock from Oct 5 2017 is a perfect example of how profits can be made despite an 18% or more, collapse in a stock.

This strategy article looks at the ongoing trade in AT&T Stock and explains how the trade has been handled and how to study the history of a stock to assist in calming fears during a collapse and instead focus on earnings even more profits. Even though I may find y capital stuck in a downtrend does not mean I cannot continue to enjoy profits in both the collapse of a stock and its eventual rebound. This article shows one such trade.

The rest of this strategy article is for FullyInformed Members.