Trade Continuation: Intel (INTC) Naked Puts

On October 10, 2012 I continued the following transaction:


08/24/12   STO 5 INTC Oct 20 2012 23 Puts @.35      161.20
10/10/12   BTC 5 INTC Oct 20 2012 23 Puts @1.22   -623.79
10/10/12   STO 5 INTC Nov 17 2012 23 Puts @1.53   761.14

This is how I played the Intel tank on these puts last month. On this trade I have now brought in $298.55 in option premium. If put to me my cost basis is down to $22.40. I anticipate rolling these puts out, rolling out and reducing a contract or rolling down and out. All this will occur prior to option expiration and will only be done for a net credit.

Even though INTC has tanked I am still bringing in regular income and reducing my cost basis in the stock. Unfortunately, my margin maintenance has increased substantially and of this writing it sits at $2800.

I very recently thought Intel had bottomed but now there are rumors that Apple wants to build their own processors and not use Intel anymore. Intel is a huge multinational with a rising dividend so I'm not too worried. I will keep on: rolling, rolling, rolling...

New Trade: Pepsico (PEP) Naked Puts

On October 22, 2012 I entered into the following transaction:

10/22/12   STO 2 PEP Dec 22 67.5 Puts @.8     $148.46

This is a 59 day trade that uses ~$2600 in margin maintenance. Pepsi had showed a bit of weakness after issuing it's quarterly report. If these puts expire worthless we will earn 5.71% in 59 days or 35.32% annual return on maintenance. If the shares our put to us our yield on cost will be 3.2%.

Trade Continuation: Intel (INTC) Naked Puts

On October 10th I rolled this Intel trade as follows:

08/22/12   STO 5 INTC Oct 20 2012 24 Puts @.37        $171.18
10/10/12   BTC 5 INTC Oct 20 2012 24 Puts @2.15     -1088.79
10/10/12   STO 5 INTC Nov 17 2012 24 Puts @2.40     1196.13



It's no secret that Intel tanked...and hard. When I entered into this trade Intel was at 25.70 and it tanked to the low 21's.

I rolled these puts out a month for a net credit of $107.34. I have now brought in $278.51 in option premium. This lowers my cost basis in INTC to $23.44. As of this writing that puts me down ~.96/share. Not bad for a complete tank job! Put selling is a very valuable trading tool.

Absent unforeseen circumstances, I will roll these puts again in a couple of weeks, dropping my cost basis once more. I can roll out at the same strike with 5 contracts, roll out at the same strike lowering to 4 contracts or roll out and down. I will only do so for a net credit.

Profitable Trade: Conoco Phillips (COP) Naked Puts

I know it's been awhile since I posted. I've been busy at work, play and with family. In any event I closed the following transaction for a profit:

09/05/12   STO 3 COP Oct 20 50 Puts @.38    $101.73
10/02/12   BTC 3 COP Oct 20 50 Puts @.04       -12.06

In this trade I made $89.67 in 26 days on ~$1500 in margin maintenance. This equates to a return on maintenance of 5.98% or 83.95% annual. I closed the trade for a profit without paying a commission.

I've got other trades to report and I'll try to post once a day for a while and get back in the swing of things.