Yesterday I continued the following transaction:
03/19/2012 STO 3 GDX Jun 16 2012 45 Puts@.99 284.71
06/07/2012 BTC 3 GDX Jun 16 2012 45 Puts@.68 -216.28
06/07/2012 STO 3 GDX Jul 21 2012 42 Puts@.99 284.71
I took the opportunity with the recent strength in GDX to roll out and down 3 strikes for a net credit of $68.43. We have now collected $353.14 in option premium. If put to us at the new strike our cost basis will be $40.82. Not bad considering GDX was trading at 50 at the time we entered into this trade.
If these puts expire worthless we will earn $353.14 in 4 months on an average of ~$2300 in margin maintenance. This equates to a 15.35% return on maintenance or ~46% annual.
what do you mean when refering to naked puts? Is not really clear for me.
ReplyDeleteI have heard a lot about the risks of nakes options..
DeleteHi, a naked put in my book is a put to purchase stock that I haven't set aside the cash for. I personally ramp up returns by using margin maintenance (at no cost) to control more stock then I have cash for. Since I haven't set aside the cash the put is naked.
ReplyDeleteTake care, Chester