Mastering MicroStrategy (MSTR) Trades: How I Took Profit Off the Table with Covered Calls

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In this post, we’ll break down a recent successful trade I made with MicroStrategy (MSTR), where I leveraged a covered call strategy to lock in profits. Whether you’re a seasoned options trader or just getting started, understanding how to manage positions like this one can provide valuable insights for generating consistent income. Let’s dive into how I made a 90% gain and took profit off the table by executing a well-timed options strategy.

Understanding the MicroStrategy Trade

In my recent options trade with MicroStrategy, I sold a call option with a strike price of $420. The stock was trading around $366, which was significantly below the strike price, giving me ample room for profits. The key to this trade was the 37 premium I received when I sold the call, giving me a cushion down to about $387 before I’d begin losing money.

The Importance of Taking Profits Early

When I saw that my position was up about 90%, I decided to take the profit off the table. The stock price had been moving around slightly, but I wasn’t focused on short-term fluctuations. Instead, I followed my strategy of locking in profits when the market gives me the chance.

Taking profits early has always been a key part of my trading philosophy. While I could have waited for the stock to potentially rise further and earned a bit more, I prefer to secure my gains now rather than risk a reversal in price. It’s all about risk management—by taking the profit at this point, I can avoid being caught in any sudden market moves that could reduce my profits.

Rolling Options: A Strategic Move for Future Profits

After closing out my position, I left myself with the flexibility to roll the options up to next week’s 400 strike calls, depending on the premium or “juice” available. The beauty of options trading is that you can always adjust your strategy. If I were to roll, it would give me a chance to further capitalize on market movements while maintaining control of my risk.

Rolling allows me to keep my capital working for me, as it provides additional opportunities to generate income without locking myself into a position for too long. This flexibility is crucial in volatile markets, where things can change quickly.

Realizing a $223,000 Profit: Why It’s Worth It

In just five days, I managed to take a $223,000 profit from this trade. Initially, I had aimed for a smaller gain of around $24,000 to $25,000, but the market provided an unexpected opportunity for a 90% gain on my call option. The key takeaway here is that taking profits when the opportunity arises and not waiting for more dramatic price moves is often the smartest decision.

MicroStrategy’s stock could have easily surged from $366 to $420, but instead of gambling on that potential increase, I opted to lock in the $223,000 and move on to the next opportunity.

Managing Positions with Market Orders

In this case, I used market orders to close my position. With just seven contracts in play, the position wasn’t large enough to cause significant price movements, so a market order was the most efficient choice. The options I sold were priced between $11.60 and $12.30, and I trusted the market maker to fill my order at a fair price.

For smaller positions, I find market orders to be the best way to execute trades quickly and at a reasonable price, especially when the spread isn’t too wide.

Life-Improving Tips

Take Profits Early: Don’t wait for a perfect exit. If you’re up 90% on a trade, it’s often better to take the profit and move on.
Roll When Necessary: Use rolling options to extend your positions if you believe the market still has room to run. But always manage your risk.
Use Market Orders for Small Positions: If you’re trading fewer contracts, market orders are often the quickest and most efficient way to close positions.
Stay Flexible: The market can change quickly, and flexibility in your strategy ensures you can adapt to new opportunities.

FAQs

Q: Why did you close your position instead of waiting for the stock to rise to $420?

A: I decided to take profits early because the stock was unlikely to rise significantly in the short term. By locking in the profit, I avoid the risk of losing it if the stock moves in the opposite direction.

Q: How do you decide when to roll options?

A: I roll options when I believe the stock will continue moving in my favor, and I want to extend the time for further potential gains. The key is to assess whether the premium offers enough “juice” to justify rolling the position.

Q: What happens if the stock price goes up after I close my position?

A: That’s the risk in options trading. However, by taking profits when the opportunity presents itself, you minimize the risk of losing your gains. Plus, there are always other opportunities to reinvest your profits.

Call to Action

If you’re looking to master the art of options trading, like I did with this MicroStrategy trade, consider joining my Cash Flow Machine system. It’s designed to help you consistently generate income through well-planned trades, with minimal risk.

Get started today

Conclusion

Options trading doesn’t have to be complex. By following a well-defined strategy—like taking profits early, rolling when needed, and using market orders—you can steadily grow your income from the markets. Stay flexible, and don’t hesitate to lock in profits when you have the chance. With a methodical approach, trading options can become a powerful tool for building wealth over time.

Mastering MicroStrategy (MSTR) Trades: How I Took Profit Off the Table with Covered Calls

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