Playing with options can be fun. It is more fun when you make money. I sold a call option against my shares of Kohl’s (KSS), and you can read the original article. Well, my option was about to expire. I was surprised to see that they took my shares, but I am the winner.
What Option did I have fun with?
I sold a call option for $419.95 and it was callable at $40. It was set to expire last Friday. Somebody actually decided to call the option and they paid us $40 a share. We lost a little bit on money on the shares. However, they paid us $419.95 for the right to buy the shares from us. And, during that time, Kohl’s (KSS) paid us a $55 dividend. This totaled a net profit of $334.41. That feels good.
Including the purchase of the shares and selling the call option, this cost us $3,715.55. With our $334.41 of profit, we made a 9% profit in about 3 months. Now that is a great profit and I am the winner. Sorry about the gloating, but this feels great.
They Took My Shares. What Should I Do?
When I looked at the market on 4/24/17, my shares are actually worth less than what I sold them for, or when those people decided to take them from me. My shares got sold for $3,994.96 and I bought them back for $3,983.85, including those pesky commissions. I bought my shares back for $11.11 cheaper, or another way, I made another $11.11.
And we had such fun with the last call option, we decided to sell another. We sold another call option with a Strike of $40 due in May 19th, 2017. We received another $179.35
Should We Have Bought Our Shares Back?
While retail is still struggling, they still have a nice 5.5% dividend yield. Their earnings are still more than enough to cover their dividend payment. The cash flow is still great. I do not see any recent news to change my mind. We are happy to own the dividend stock and they will continue to pay us a nice dividend.
Do you think we should have repurchased our shares of Kohl’s (KSS)? Do you collect dividends from them? Join the conversation below in the comment section.
Disclosure: KSS – We own shares and sold a call options