Russell 2000 January Call

Last December I bought January call options on the iShares Russell 2000 ETF (IWM), slightly out of the money, at $2.40 based on this article. In mid-January, the expiration date, I sold the options for $7.70 for a 320% gain, excluding trading expenses.

I am going to try this again. Thursday I bought January call options at $4.00. I am buying about a week earlier than I did last year. Also I am buying an option which is in the money. Last year the option I bought was out of the money. So I have put up about 75% more money initially, but hope to make a better return. If I am correct and the options increase in value over the next week or two, I may increase my position.

Update 12/16/2004: So I didn't do exactly what the article said to do. The options have been much lower that the $4.00 that I bought them at. I think they got close to $2.00.

If I had bought them today, I could have gotten them for around $3.20. I may look into buying more options slightly out of the money if it looks like the Russell 2000 is starting to move up, but right now I don't like how it looks. I will continue to hold the previously purchased options until near their expiration in mid-January.