Tuesday, March 27, 2012

Profitable Trade: Walgreen's (WAG) Naked Puts

Today I closed the following transaction for a profit in a taxable account:

02/27/2012    STO 4 WAG Mar 17 2012 32 Puts @.23             78.99
03/06/2012    BTC 4 WAG Mar 17 2012 32 Puts @.3            -133.00
03/06/2012    STO 4 WAG Apr 21 2012 31 Puts @.7             276.94
03/27/2012    BTC 4 WAG Apr 21 2012 31 Puts @.05            -20.04

Walgreen's didn't collapse after losing the Express Scripts deal so these puts lost all their value. I took the opportunity to close the position without a commission. We made $202.89 in 31 days on ~$1700 in margin maintenance. This equates to a return on maintenance of 11.93% or 140.46% annual. The returns are inflated as there was a quarterly report looming and fear from the Express Scripts deal.

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