I took profits today in a Bull Call Spread on Robinhood ($HOOD). The trade was working, the options didn’t expire until January, and price action was moving in my favor… so why close it now?
Let me walk you through it.
I put the trade on June 2nd: a January 70/100 call spread, paying $6.25 for the setup. Today, just 29 days later, I closed it for $17.05:
Now, the most this spread could be worth at expiration is $30. So technically, I left some money on the table. If I held all the way through to January, I mighthave doubled my profits from here.
But that would mean tying up my capital for another 170+ days.
Instead, I walked away with a 172% gain in less than a month. Not bad, right?
Here’s the thing with Bull Call Spreads: once both strikes are in the money early, and the trade has made a big move in your favor, you’re in a situation where the upside is capped and the risk of giving it all back starts creeping in.
That’s not a combo I love sitting in for long.
If this had been a long call with unlimited upside? Maybe I’d let it ride. But with capped profit potential and the bulk of the move already captured, I’d rather redeploy that capital into a new opportunity.
Quick gains are nothing to be ashamed of — especially when you can stack ’em.
On to the next.
Sean McLaughlin | Chief Options Strategist, All Star Charts
