Why I Closed a Winning Micron Options Trade Before the Big Move

 

I’ll walk you through a trade that tests discipline—a Micron call credit spread I closed at my 25% profit target, only to watch the stock drop $50 the next day. The technical setup was showing reversal, my strikes were positioned for a counter-trend collapse, and overnight theta and vol contraction were doing the heavy lifting.

TLDR

• Closed Micron call credit spread at 50% of max profit, banking $42 per contract for a 25% return on capital
• Trade was structured for a counter-trend reversal in a fundamentally strong stock
• After exit, Micron dropped $50, which would’ve driven the spread to full profit
• Exit prioritized capital preservation, gap risk control, and redeployment speed
• Consistent 25% gains beat unpredictable windfalls in a rules-based system

Why trade against strength? Because strong stocks still exhaust in the short term. On Micron’s hourly chart, price broke below its channel while my pulse indicator rolled under zero—classic divergence. That’s not fighting trend; that’s exploiting temporary inefficiency. Counter-trend trades aren’t predictions—they’re precision bets with defined risk.

Why call credit spreads? They monetize three forces at once: time decay, volatility contraction, and directional bias. I collected $84 while risking $166, creating a clean, predefined framework with asymmetric payoff. When volatility spikes and then collapses, spreads do the work fast.

The structure: I sold the 435–437.5 call spread, targeting resistance where price should stall. Ten spreads required $1,660 in capital with $420 potential at 50% max gain. Strike width balanced premium and risk—nothing fancy, just efficient.

The exit: Overnight trades compress risk into a narrow window. When the spread hit 50% max profit the next morning, I closed it. That locked in a 25% ROC and eliminated reversal and gap risk. My typical weekly targets sit in the 40–60% range—enough to harvest theta without overstaying.

The aftermath: After I exited, Micron dropped another $50. Holding would’ve delivered 100% of the premium. But that’s hindsight talking-where everybody is hitting the top or bottom price point.   Letting positions ride for “just a little more” is how rules collapse.

I don’t optimize for perfect trades—I optimize for repeatable ones. I’ll take consistent 25% returns over variable home runs every time.

Category: Online Options Trading, Options Trading, Options Trading Basics, The Spread Trader