Why Taking Profits Early Can Increase Returns

During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Tobias discussed Why Taking Profits Early Can Increase Returns. Here’s an excerpt from the episode:

I really like the apartment REIT industry right now. I think that the disparity between renting and owning a home is really, really high. And I think renting is very attractive.

Now there was excess supply in the Sunbelt and Camden’s definitely been hit by that, just like all of its peers in the Sunbelt, in that rental prices have not increased at the rate that they were increasing. But that supply is getting worked through and there still obviously is growth in those regions. So on May 18th, we sold the $95 put.

The stock was trading at $103.93. We collected $1.68 a share, 60 days to expiration. Cash required was $9,332. And so what happened was Camden had a nice little rally and we were able to buy back the put for 50 cents, which was 70% of the profit.

It was a 27.2% annualised return. And then we freed up almost 10 grand just to be able to set a new trade. So once again, that’s one of the benefits.

When you start trading options on your own and you don’t have help, sometimes it can be hard to manage them and keep track of them. And that’s one of the big benefits of the value options letter. Let’s work.