Our Cedar Fair (NYSE: FUN) June call option has surged in just a month, and it is now up more than 100%.
Let’s go ahead and lock in that profit by selling half of the position.
Action to take: Sell half of your position in the FUN June 2015 $45 call option (FUN150619C00045000) for $8.40 or more. At last glance, it was trading at $9.
If you only hold one option contract, go ahead and sell it. If you own multiple option contracts, sell just half.
I don’t want us to close the whole position quite yet because our gain came in earlier than expected. The option has a June expiration, meaning we have five more months to benefit from Cedar Fair’s sweet spot. By selling half of our position, we are ensuring a gain amid a volatile market, while letting the other half ride.
You may recall that this was our first spring trade. Cedar Fair is an amusement-park operator, and investors typically buy the company’s shares ahead of the spring, just before the company moves into its peak operational season. Given Cedar Fair’s historical entry and exit points, we should benefit handsomely by letting the other half of our trade ride a bit longer.
Our exit point doesn’t officially arrive until April or May, when investors typically give the stock a break. That said, I am not afraid to take profits when they appear, as we are doing today.
I’m heading to Germany this week to do some research about the economic environment in Europe, so this will be the only dispatch for the week — barring any sudden moves in our positions.
Until next time, good trading…
Editor, Precision Profits