A couple of days ago I entered into the following transaction in a taxable account:
01/30/2012 STO 7 SLV Feb 18 2012 30 Puts @.23 145.70
It looks like the precious metals bottomed ~ three weeks ago. SLV has been north of 30 and rising for some time. If it drops SLV has provided good opportunities to roll out to the next month and down a strike for a net credit. As such, we have an additional exit strategy in place. If I hadn't been dealing with a family emergency I probably would have been a tad more patient and waited for SLV to drop a bit and written the less risky 29's for a little less return. I didn't have that luxury but I wanted to put time decay to work while I was out of town. If these puts expire worthless we will earn $145.70 in 18 days on $2800 margin maintenance (which is free BTW). This equates to a 5.2% return or 105.44% annual.
Great call once again.
ReplyDelete