Our May Sugar Call option expires on 4/15/14 which gives us a couple more weeks. Our initial target on this trade was the 50% Retracement Level of 17.30, but when prices went as high as 18.47 before reversing, we moved our target to the 50% Retracement Level on the Weekly Sugar chart of 25.39 – see our previous post: Going Long Sugar After Our Last Option Expired
Today, our May Call option is worth $1251.20 as prices spiked up to 17.89 (at the time of this post). We paid $828.80 back on 2/19/14, so we sold this May Sugar Call option for $1251.20 and pocketed the $422.40 profit.
That’s a 51% ROI in a little over 1 month.
We still believe prices can go as high as the 50% Retracement Level of 25.39. We chose to sell now instead of holding this option until it expires (or exercising it for a futures contract) because sugar prices have been a little to volatile for our tastes lately. Your trading style may be more risk-tolerant in which case you would hold onto this option to see what happens over the next couple weeks. We won’t be surprised if prices make new highs and we miss out on those additional profits, but in this case we prefer to protect our capital for future trades.