Trades on the Table — META option +61% in 26 days

This week the best trade is on… META.

I started two long call option contracts on Meta on 27 Aug and 26 days later, it generated a 61% return on capital.

I took profit on one contract on 22 Sep to recycle the capital while letting the other contract run to continue capturing the upside.

Total realized profit: $17,139.71 (61% in 26 days).

That’s the power of stock options.

Why the position existed at all

I wish I could tell you that I saw this one coming, but I would be lying.

What I knew was that a high quality business has been beaten up on price and the risk to reward ratio is good enough. So I went in knowing the downside is relatively management. Given sufficient runway, the upside is more likely to happen.

Meta had sold off from $600 to $540 on headlines and lawsuit news rather than on business results.

I'd seen that script before. The business hadn't changed.

I usually I sell options for income, but I bought long calls instead this time to capture the upside.

Instead of buying 100 shares directly, I bought time — a long-dated call, at a fraction of what the shares would have cost.

Capital outlay is smaller, i.e. I am risking lesser capital; and there is sufficiently long runway to let the upside play out.

I was prepare to hold the position for 1.5 years, but if it moves in 26 days, that’s just a huge bonus.

Why I existed one contract instead of holding

The position runs 61% in under a month, I definitely still more time on my side. I could continue to hold if I think Meta has more upside from here.

But being more conservative and having gone through trades that turned bad later, I decided to take some chips off the table.

Selling one contract brought back $45,375 against the $56,466 I originally put in.

Read that again - I have recouped 80% of the capital I put in, so any upside from here has near infinite return on capital.

I can continue to let the remaining contract run to capture more upside while I redeploy the capital to other opportunities.

The caveat

A 61% move in four weeks is hard to systematically reproduce. Anyone telling you that they can consistently do this is probably a scam.

But we could focus on what we can control: waiting for the right entry, know the worst case scenario with good risk reward ratio, and then let the upside take care of itself.

This would help us be profitable in the long run.

Keep growing!

Joe