Last week I sold a Wynn contract, a cash secured put. The Wynn contract was a 3 day option. It expired on Friday October 14th. By letting the contract expire, I was forced to buy 100 Wynn shares at $98.00 a share. I was nervous about this contract because Wynn stock price started dropping right after I sold the contract.
I wasn’t too worried though, because I don’t mind owning WYNN shares. This is why I was willing to gamble on this contract. Of course, I would’ve liked the contract to expire worthless, but since it didn’t, I gladly took the shares.
Wynn Contract Details
- Contract length: 3 Days
- Fees :$9.71
- Strike Price: $98.00
- Premium: $1.21
- Annualized Rate of Return: 139.75%
- Net Profit: $111.29
The contract expired on Friday. Yes, this means I made $111.29. Sounds awesome doesn’t it? True, I made $111 dollars, however, I paid $98 a share for a stock that closed on Friday at $93.37. My breakeven price on the Wynn contract was $96.79 per share. This means that by buying shares of Wynn stock at $98, I paid $3.42 more than market price.
At 100 shares, I paid $342 more for Wynn shares than market price. This sucks, but it’s not a big deal. You cannot win every trade. I plan on selling more WYNN contracts. I’ll just go from selling puts to selling covered calls. There’s enough price volatility with WYNN stock to make for interesting covered calls. I should be able to make back the $342 I lost in two trades. Also, Wynn will be announcing a dividend soon. I’ll capture that as well.