Steel Dynamics, Inc. Option Returned 71% In Less Than 3 Months

Discussion in 'Stock Market Forum' started by deepvalueinvestorsclub, Nov 12, 2019.

  1. deepvalueinvestorsclub

    deepvalueinvestorsclub New Member

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    We recommended Steel Dynamics, Inc. options when its stock was selling at $25.57. We believed the stock was worth about $78 when we made the recommendation. At this price, the stock was selling at a discount of about 67%. We reasoned that if the stock could only move upward by 30-50% before the expiration period, we would be in position to earn about 75-134%.

    We closed our positions in Steel Dynamics, Inc. options on the 30th of July, 2019 at the price of $32.86 for a nominal return of 71% and an annualized return of 211% in three months. The stock is currently selling around $30; but we have no doubt that the stock will bounce back before the expiration time. We reasoned that if we have made 71% in three months, we should take our gain and move ahead, especially when there are other opportunities we could invest the money in.

    Option symbol: STLD210115C00018000

    Expiration date: 15th January, 2021

    Stock price at recommendation: $25.57

    Strike price at recommendation: $18

    Options premium at recommendation: $8.7



    Expectation

    1. We expect the price to rise by 30%-50% to $27.86-$32.15 for a total return of 87.22%-161% before the expiration date.

    OUTCOME

    The price of the stock rose by 28.51% to $32.86 in 3 months, amounting to a nominal option return of 71% and an annualized returned of 283% respectively.

    Date sold: 30th July, 2019

    Price when sold: $32.86

    Stock return: 29%

    Option return: 71%

    Options annualized return: 283%
     
  2. longtermbull

    longtermbull Administrator Staff Member

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