Fortinet (FTNT) is the first of Cabot Profit Booster’s stocks to report earnings today after the close. Because of the earnings risk I wanted to update you on where we stand with the position, as well as the downside and upside potential the options market is pricing in for this event.
We originally bought FTNT stock at 116.75, and sold the February 120 Call for $4.
Today FTNT is trading at 120.5, and the February 120 Call is worth $5.20.
If you executed 1 covered call, you are up $375 on the stock purchase, and down $120 on the call sale, or a net potential profit of $255.
I am going to hold my position through earnings as we are in a good spot headed into the event. Should FTNT close at 120 or above on 2/21 we would make $325 on the stock, as well as $400 on the call, or a total of $725.
However, clearly there is earnings risk, and I’m guessing FTNT will move on earnings. If you want to not take the risk and lock in your profit that is a fine choice. To do so you would Buy to Close the Call, and Sell the stock, leaving you with no stock or option position.
Of note, with the stock trading at 120.5, the options market is pricing in a move of $10 for FTNT this month, or 110.5 to the downside, and 130.5 to the upside.
If you have any questions about this FTNT position, or any positions, please don’t hesitate to email me.