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%.
Showing posts with label return on maintenance. Show all posts
Showing posts with label return on maintenance. Show all posts
Monday, November 5, 2012
Thursday, November 1, 2012
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.
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.
Sunday, September 16, 2012
New Trade: Southern Company (SO) Naked Puts
On Friday when SO dipped below 45 to ~44.70 I entered into the following transaction:
09/14/12 STO 3 SO Nov 17 43 2012 Puts @.5 137.69
With Bernanke's latest moves the "risk on" trades are in vogue. That provides weakness/opportunity in the "risk off" trades, i.e., utilities, telecom and healthcare. Southern Company is my favorite utility stock and it has a rising dividend. I have been patiently waiting for the stock to drop below 45 so I could write some out of the money puts.
SO currently has a yield of 4.35%. If put to us our yield on cost will be 4.61% with another dividend rise announcement expected in April 2013. I feel that the yield will buoy the price of the stock.
This is a 64 day trade with an initial maintenance requirement of $2218. If these puts expire worthless we will earn 6.2% return on maintenance or 35.36% annual. If the stock price drops I anticipate volatility will rise and we will be able to roll down and/or out for a net credit. As such, an exit strategy is in place.
This trade illustrates the remarkable returns that naked put selling can generate. I mean this is a utility stock for goodness sake :)
09/14/12 STO 3 SO Nov 17 43 2012 Puts @.5 137.69
With Bernanke's latest moves the "risk on" trades are in vogue. That provides weakness/opportunity in the "risk off" trades, i.e., utilities, telecom and healthcare. Southern Company is my favorite utility stock and it has a rising dividend. I have been patiently waiting for the stock to drop below 45 so I could write some out of the money puts.
SO currently has a yield of 4.35%. If put to us our yield on cost will be 4.61% with another dividend rise announcement expected in April 2013. I feel that the yield will buoy the price of the stock.
This is a 64 day trade with an initial maintenance requirement of $2218. If these puts expire worthless we will earn 6.2% return on maintenance or 35.36% annual. If the stock price drops I anticipate volatility will rise and we will be able to roll down and/or out for a net credit. As such, an exit strategy is in place.
This trade illustrates the remarkable returns that naked put selling can generate. I mean this is a utility stock for goodness sake :)
Friday, September 14, 2012
Profitable Trade: Caterpillar (CAT) Naked Puts
Today I closed the following transaction for a profit:
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
09/14/12 BTC 2 CAT Sep 22 2012 77.5 Puts @.01 -2.04
I was able to close this trade for a penny and without commissions so I did. When I originally sold the puts CAT was down to $82.20. Ten days later it was over $93/share. Due to the steady rise in the stock, margin maintenance averaged down to ~$1700. As such, we earned $100.42 in 10 days on $1700 in margin maintenance. This equates to a 5.9% return on maintenance or 215% annual.
That's another thing I love about put selling. If the price of the stock skyrockets, you can close out your trade early. Each day the stock rises the amount of margin maintenance needed decreases thereby freeing capital for other trades. I remember when I exclusively traded covered calls that it would not be beneficial if the stock rose too much or too quickly. Buying back the calls when volatility was in an uptrend was not very profitable.
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
09/14/12 BTC 2 CAT Sep 22 2012 77.5 Puts @.01 -2.04
I was able to close this trade for a penny and without commissions so I did. When I originally sold the puts CAT was down to $82.20. Ten days later it was over $93/share. Due to the steady rise in the stock, margin maintenance averaged down to ~$1700. As such, we earned $100.42 in 10 days on $1700 in margin maintenance. This equates to a 5.9% return on maintenance or 215% annual.
That's another thing I love about put selling. If the price of the stock skyrockets, you can close out your trade early. Each day the stock rises the amount of margin maintenance needed decreases thereby freeing capital for other trades. I remember when I exclusively traded covered calls that it would not be beneficial if the stock rose too much or too quickly. Buying back the calls when volatility was in an uptrend was not very profitable.
Wednesday, September 12, 2012
New Trade: Phillip Morris (PM) Naked Puts
Today with Phillip Morris showing weakness and trading down below $87/share I entered into the following transaction:
09/12/12 STO 2 PM Dec 22 2012 80 Puts @1.23 234.50
I've wanted to trade PM for a while but never had the opportunity as it was in a constant incline while I like to sell puts on weakness. Phillip Morris is a blue chip company with a rising dividend. In fact it raised it's quarterly dividend today to .85/share which increases PM's yield to 3.9%. The stock has been rising but appears to have support above 80. If put to us our yield on cost will be 4.3%.
If the puts expire worthless we will earn $234.50 in 101 days on initial margin maintenance of $2100. This equates to an 11.16% return on maintenance or 40.33% annual. We have downside protection in the neighborhood of 10%. In the event the stock tanks we should be able to roll down and out for a net credit. As such, an exit strategy is in place.
09/12/12 STO 2 PM Dec 22 2012 80 Puts @1.23 234.50
I've wanted to trade PM for a while but never had the opportunity as it was in a constant incline while I like to sell puts on weakness. Phillip Morris is a blue chip company with a rising dividend. In fact it raised it's quarterly dividend today to .85/share which increases PM's yield to 3.9%. The stock has been rising but appears to have support above 80. If put to us our yield on cost will be 4.3%.
If the puts expire worthless we will earn $234.50 in 101 days on initial margin maintenance of $2100. This equates to an 11.16% return on maintenance or 40.33% annual. We have downside protection in the neighborhood of 10%. In the event the stock tanks we should be able to roll down and out for a net credit. As such, an exit strategy is in place.
Monday, September 10, 2012
Profitable Trade: McDonald's (MCD) Naked Puts
Today I closed the following transaction for a profit:
08/13/12 STO 2 MCD Sep 22 2012 85 Puts @.72 132.50
09/10/12 BTC 2 MCD Sep 22 2012 85 Puts @.05 -10.04
This was a 28 day trade that used ~$2800 average maintenance. We earned $122.46 which equates to a 4.37% return on maintenance or 56.96% annual.
McDonald's dip in price was short lived. I took advantage of a brief bit of fear and now McDonald's is back on the rise. I will look to enter another position if I see further weakness. In fact I might write the 87.5's.
08/13/12 STO 2 MCD Sep 22 2012 85 Puts @.72 132.50
09/10/12 BTC 2 MCD Sep 22 2012 85 Puts @.05 -10.04
This was a 28 day trade that used ~$2800 average maintenance. We earned $122.46 which equates to a 4.37% return on maintenance or 56.96% annual.
McDonald's dip in price was short lived. I took advantage of a brief bit of fear and now McDonald's is back on the rise. I will look to enter another position if I see further weakness. In fact I might write the 87.5's.
Saturday, September 8, 2012
Profitable Trade: GDX Naked Puts
Yesterday I took advantage of the strength in GDX (precious metal miners ETF) and closed the transaction, without a commission as follows:
03/20/2012 STO 3 GDX Apr 21 2012 47.0 Put @ .53 146.75
04/20/2012 BTC 3 GDX Apr 21 2012 47.0 Put @.63 -201.24
04/20/2012 STO 3 GDX May 19 2012 45 Put @.97 288.70
05/14/2012 BTC 3 GDX May 19 2012 45 Put @3.46 1050.24
05/14/2012 STO 3 GDX Jun 16 2012 45 Put @3.99 1194.68
06/01/2012 BTC 3 GDX Jun 16 2012 45 Put @1.20 - 372.25
06/01/2012 STO 3 GDX Jul 21 2012 43 Put @1.60 467.74
07/19/2012 BTC 3 GDX Jul 21 2012 43 Put @1.40 -432.24
07/19/2012 STO 2 GDX Sep 22 2012 42 Put @2.41 470.50
09/07/2012 BTC 2 GDX Sep 22 2012 42 Put @.04 -8.04
This wild ride has come to an end with a profit in tow. We earned $504.36 in 5 1/2 months. Due to the rise in the stock price our average maintenance was lowered to ~2100 in average margin maintenance. This equates to a 24% return or 52% annual.
We rode this trade through a serious decline, a bottom and then a rise. I stuck to my guns and always sought to roll out and/or down for a net credit. In July I was able to roll down and out for a net credit and lower the number of contracts I had in play thereby lowering the amount of capital committed to the trade. Amazingly I got paid to do this.
This trade is my poster child for the power of rolling options. A five and a half month hold is longer than usual for me but at the end it was an educational, challenging and most importantly, a profitable trade.
03/20/2012 STO 3 GDX Apr 21 2012 47.0 Put @ .53 146.75
04/20/2012 BTC 3 GDX Apr 21 2012 47.0 Put @.63 -201.24
04/20/2012 STO 3 GDX May 19 2012 45 Put @.97 288.70
05/14/2012 BTC 3 GDX May 19 2012 45 Put @3.46 1050.24
05/14/2012 STO 3 GDX Jun 16 2012 45 Put @3.99 1194.68
06/01/2012 BTC 3 GDX Jun 16 2012 45 Put @1.20 - 372.25
06/01/2012 STO 3 GDX Jul 21 2012 43 Put @1.60 467.74
07/19/2012 BTC 3 GDX Jul 21 2012 43 Put @1.40 -432.24
07/19/2012 STO 2 GDX Sep 22 2012 42 Put @2.41 470.50
09/07/2012 BTC 2 GDX Sep 22 2012 42 Put @.04 -8.04
This wild ride has come to an end with a profit in tow. We earned $504.36 in 5 1/2 months. Due to the rise in the stock price our average maintenance was lowered to ~2100 in average margin maintenance. This equates to a 24% return or 52% annual.
We rode this trade through a serious decline, a bottom and then a rise. I stuck to my guns and always sought to roll out and/or down for a net credit. In July I was able to roll down and out for a net credit and lower the number of contracts I had in play thereby lowering the amount of capital committed to the trade. Amazingly I got paid to do this.
This trade is my poster child for the power of rolling options. A five and a half month hold is longer than usual for me but at the end it was an educational, challenging and most importantly, a profitable trade.
Thursday, September 6, 2012
New Trade: Intel (INTC) Naked Puts
Yesterday with Intel trading down to ~$24.40 I entered into the following transaction:
09/05/2012 STO 5 INTC Oct 20 2012 22 Puts@.22 $96.16
This is a 45 day trade that is using $1350 in margin maintenance. If the puts expire worthless we will earn 7.1% or 57.6% annual return on maintenance. If put to us our yield on cost will be a whopping 4.12%.
That's 3 Intel trades I've got going for October with the 24's, 23's and now the 22's. After today's action I feel pretty good about it but if the trades go against me there appears to be ample opportunity to roll down and out for a net credit. As such, an exit strategy is in place.
09/05/2012 STO 5 INTC Oct 20 2012 22 Puts@.22 $96.16
This is a 45 day trade that is using $1350 in margin maintenance. If the puts expire worthless we will earn 7.1% or 57.6% annual return on maintenance. If put to us our yield on cost will be a whopping 4.12%.
That's 3 Intel trades I've got going for October with the 24's, 23's and now the 22's. After today's action I feel pretty good about it but if the trades go against me there appears to be ample opportunity to roll down and out for a net credit. As such, an exit strategy is in place.
Wednesday, September 5, 2012
New Trade: ConocoPhillips (COP) Naked Puts
Today when the Dow was down less than 1% and COP had sunk to ~54.80 I entered into the following transaction:
09/05/12 STO 3 COP Oct 20 50 Puts @.38 $101.73
ConocoPhillips is a rising dividend, blue chip, oil & gas company. I have been waiting for it to show some weakness, i.e., drop below 55, as I love it's yield as a buoy for the stock price. Today I got my wish although I must admit that the lack of news was a bit disconcerting. Hopefully there are not problems brewing behind closed doors.
This is a 45 day trade that uses ~$1600 in margin maintenance. If the puts expire worthless I will earn 6.36% return on maintenance in 45 days or 51.6% annual.
If COP were to drop below 50 and the stock was put to us our yield on cost would be a whopping 5.3%. I like this yield amount as a buoy of the stock price. If the price tanks I feel confident that I could roll down and/or out for a net credit. As such, an exit strategy is in place.
I have been enjoying writing naked puts far out of the money because the maintenance requirement is so low. This allows me to enjoy higher returns on maintenance and to commit less capital to any one trade. In addition, the downside protection is very high making this a comfortable yet probably profitable setup.
09/05/12 STO 3 COP Oct 20 50 Puts @.38 $101.73
ConocoPhillips is a rising dividend, blue chip, oil & gas company. I have been waiting for it to show some weakness, i.e., drop below 55, as I love it's yield as a buoy for the stock price. Today I got my wish although I must admit that the lack of news was a bit disconcerting. Hopefully there are not problems brewing behind closed doors.
This is a 45 day trade that uses ~$1600 in margin maintenance. If the puts expire worthless I will earn 6.36% return on maintenance in 45 days or 51.6% annual.
If COP were to drop below 50 and the stock was put to us our yield on cost would be a whopping 5.3%. I like this yield amount as a buoy of the stock price. If the price tanks I feel confident that I could roll down and/or out for a net credit. As such, an exit strategy is in place.
I have been enjoying writing naked puts far out of the money because the maintenance requirement is so low. This allows me to enjoy higher returns on maintenance and to commit less capital to any one trade. In addition, the downside protection is very high making this a comfortable yet probably profitable setup.
Tuesday, September 4, 2012
New Trade: Caterpillar (CAT) Naked Puts
Today with the Dow down 90 points and CAT down to $82.20 I entered into the following transaction:
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
Caterpillar is a blue chip, rising dividend stock with high volume and high volatility. CAT has been raising it's dividend for 19 years and the last rise was very healthy which I take as a vote of confidence from management. I've been watching Caterpillar for signs of weakness to enter a position and today provided that. There appears to be strong support for CAT at $80/share.
This is an 18 day trade with only 13 days of active trading included in those 18 days. If these puts expire worthless we will earn 5.38% on $1905 of margin maintenance or 109% annual. If put to us our yield on cost will be 2.7% which is high for CAT. If the stock drops we should have ample opportunity to roll down and/or out for a net credit. As such, we have an exit strategy in place.
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
Caterpillar is a blue chip, rising dividend stock with high volume and high volatility. CAT has been raising it's dividend for 19 years and the last rise was very healthy which I take as a vote of confidence from management. I've been watching Caterpillar for signs of weakness to enter a position and today provided that. There appears to be strong support for CAT at $80/share.
This is an 18 day trade with only 13 days of active trading included in those 18 days. If these puts expire worthless we will earn 5.38% on $1905 of margin maintenance or 109% annual. If put to us our yield on cost will be 2.7% which is high for CAT. If the stock drops we should have ample opportunity to roll down and/or out for a net credit. As such, we have an exit strategy in place.
Monday, August 27, 2012
New Trade: Intel (INTC) Naked Puts
On Friday before the close with Intel trading at ~24.85 I entered into the following transaction:
08/24/12 STO 5 INTC Oct 20 2012 23 Puts @.35 161.20
This is essentially a one strike down, double down of my trade of a few days ago. I was able to take advantage of weakness/fear in Intel due to the Buffett hangover and weak results from Hewlett-Packard and Dell. If put to us our yield on cost will be right under 4% and we're just one roll away from a yield on cost above 4%. I feel pretty good that a 4% yield will buoy the stock price. In addition, we have strong support at the 25 price level.
This is a 57 day which uses ~$1800 in margin maintenance. If the puts expire worthless we will earn ~8.95% or 57.3% annual return on maintenance. If the stock drops I feel confident we can roll out and/or down for a net credit. As such, an exit strategy is in place.
08/24/12 STO 5 INTC Oct 20 2012 23 Puts @.35 161.20
This is essentially a one strike down, double down of my trade of a few days ago. I was able to take advantage of weakness/fear in Intel due to the Buffett hangover and weak results from Hewlett-Packard and Dell. If put to us our yield on cost will be right under 4% and we're just one roll away from a yield on cost above 4%. I feel pretty good that a 4% yield will buoy the stock price. In addition, we have strong support at the 25 price level.
This is a 57 day which uses ~$1800 in margin maintenance. If the puts expire worthless we will earn ~8.95% or 57.3% annual return on maintenance. If the stock drops I feel confident we can roll out and/or down for a net credit. As such, an exit strategy is in place.
Wednesday, August 22, 2012
New Trade: Intel (INTC) Naked Puts
This afternoon with the market down ~80 points and Intel down to ~$25.70 I entered into the following transaction:
08/22/12 STO 5 INTC Oct 20 2012 24 Puts @.37 $171.18
Buffett just sold his stake in Intel. Bill Cara just sold his stake. Fear and uncertainty is setting in for Intel. I took this opportunity to write puts a point below the 25 support level.
This is a 59 day trade which will initially take $1700 in margin maintenance. If the puts expire worthless, return on maintenance will be 10% in 59 days or 61.86% annual. If put to us our yield on cost will be 3.8%. That yield should buoy the stock absent unforeseen market conditions. In the event the stock tanks we will look to roll down and out for a net credit. As such, an exit strategy is in place.
08/22/12 STO 5 INTC Oct 20 2012 24 Puts @.37 $171.18
Buffett just sold his stake in Intel. Bill Cara just sold his stake. Fear and uncertainty is setting in for Intel. I took this opportunity to write puts a point below the 25 support level.
This is a 59 day trade which will initially take $1700 in margin maintenance. If the puts expire worthless, return on maintenance will be 10% in 59 days or 61.86% annual. If put to us our yield on cost will be 3.8%. That yield should buoy the stock absent unforeseen market conditions. In the event the stock tanks we will look to roll down and out for a net credit. As such, an exit strategy is in place.
Sunday, August 19, 2012
Profitable Trade: Freeport-McMoran (FCX) Naked Puts
On Friday the following puts expired worthless:
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This was a 25 day trade with ~$1200 in average margin maintenance. Margin maintenance was reduced from the initial amount of $1600 due to the rise of the underlying stock.
Our return on maintenance was 10.22% or 149% annual. The returns are inflated because this is a volatile security. It is a great stock to trade in my opinion as it has fairly concrete support levels, a great rising dividend, high liquidity and high volatility. This will definitely be one I trade again. I would like to see the stock drop back a bit first, preferably to 32 and change.
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This was a 25 day trade with ~$1200 in average margin maintenance. Margin maintenance was reduced from the initial amount of $1600 due to the rise of the underlying stock.
Our return on maintenance was 10.22% or 149% annual. The returns are inflated because this is a volatile security. It is a great stock to trade in my opinion as it has fairly concrete support levels, a great rising dividend, high liquidity and high volatility. This will definitely be one I trade again. I would like to see the stock drop back a bit first, preferably to 32 and change.
Saturday, August 18, 2012
Profitable Trade: Lowe's (LOW) Naked Puts
Yesterday the following puts expired worthless:
7/16/12 STO 4 LOW Aug 18 '12 24 Puts @.34 $122.97
At the time of this trade LOW was down ~3% to $25.90. It ended up in the high 27's. This was a 33 day trade with average margin maintenance of ~$1400. Our return on maintenance was 8.78% or 97.1% annual. I will look to trade Lowe's again should the price drop as it has a lot of daily moves but not much of a monthly one. This is perfect for put selling.
7/16/12 STO 4 LOW Aug 18 '12 24 Puts @.34 $122.97
At the time of this trade LOW was down ~3% to $25.90. It ended up in the high 27's. This was a 33 day trade with average margin maintenance of ~$1400. Our return on maintenance was 8.78% or 97.1% annual. I will look to trade Lowe's again should the price drop as it has a lot of daily moves but not much of a monthly one. This is perfect for put selling.
Tuesday, August 14, 2012
New Trade: McDonald's (MCD) Naked Puts
Yesterday with the market down a bit and MCD trading at 87.90 I entered into the following transaction:
08/13/12 STO 2 MCD Sep 22 2012 85 Puts @.72 132.50
McDonald's is a Dividend Aristocrat/Champion/Achiever that really needs no introduction. There has been a bit of weakness in the stock as of late due to July same store sales declining a miniscule percentage. I almost pulled the trigger on the 82.5's a few days ago when MCD was at 86.10 but decided against it because I thought the market and the stock still had room to drop. Opportunity missed.
This trade at the 85's is still pretty good as 85 is a strong support line for MCD. If the stock drops I will roll out and/or down for a net credit. As such, an exit strategy is in place.
If put to us our yield on cost will be ~3.3% and MCD is set to raise it's dividend in November. This dividend rise should buoy the stock. If these puts expire worthless we will earn 4.3% on margin maintenance of $3078.25 in 40 days which equates to 39.23% annual return on maintenance.
I didn't see any fat pitches to swing at so I entered into this one trade to take advantage of time decay in what I see as a fairly safe play.
08/13/12 STO 2 MCD Sep 22 2012 85 Puts @.72 132.50
McDonald's is a Dividend Aristocrat/Champion/Achiever that really needs no introduction. There has been a bit of weakness in the stock as of late due to July same store sales declining a miniscule percentage. I almost pulled the trigger on the 82.5's a few days ago when MCD was at 86.10 but decided against it because I thought the market and the stock still had room to drop. Opportunity missed.
This trade at the 85's is still pretty good as 85 is a strong support line for MCD. If the stock drops I will roll out and/or down for a net credit. As such, an exit strategy is in place.
If put to us our yield on cost will be ~3.3% and MCD is set to raise it's dividend in November. This dividend rise should buoy the stock. If these puts expire worthless we will earn 4.3% on margin maintenance of $3078.25 in 40 days which equates to 39.23% annual return on maintenance.
I didn't see any fat pitches to swing at so I entered into this one trade to take advantage of time decay in what I see as a fairly safe play.
Thursday, July 26, 2012
New Trade: Freeport-McMoran (FCX) Naked Puts
On Tuesday I entered into the following transaction:
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This is a 25 day trade with ~$1600 in margin maintenance. If these puts expire worthless our return on maintenance is 7.67% or 112% annual. The returns are inflated because this is a volatile security. In the event this stock drops I feel confident we will be able to roll out and down for a net credit. As such, an exit strategy is in place.
If put to us at 29.70 or so, FCX will have a yield on cost of 4.2%. Theoretically, that should buoy the stock. FCX has a rising dividend.
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This is a 25 day trade with ~$1600 in margin maintenance. If these puts expire worthless our return on maintenance is 7.67% or 112% annual. The returns are inflated because this is a volatile security. In the event this stock drops I feel confident we will be able to roll out and down for a net credit. As such, an exit strategy is in place.
If put to us at 29.70 or so, FCX will have a yield on cost of 4.2%. Theoretically, that should buoy the stock. FCX has a rising dividend.
Wednesday, July 25, 2012
Trade Continuation: GDX Naked Puts
Last week I continued my GDX investment as follows:
03/20/2012 STO 3 GDX Apr 21 2012 47.0 Put @ .53 146.75
04/20/2012 BTC 3 GDX Apr 21 2012 47.0 Put @.63 -201.24
04/20/2012 STO 3 GDX May 19 2012 45 Put @.97 288.70
05/14/2012 BTC 3 GDX May 19 2012 45 Put @3.46 1050.24
05/14/2012 STO 3 GDX Jun 16 2012 45 Put @3.99 1194.68
06/01/2012 BTC 3 GDX Jun 16 2012 45 Put @1.20 - 372.25
06/01/2012 STO 3 GDX Jul 21 2012 43 Put @1.60 467.74
07/19/2012 BTC 3 GDX Jul 21 2012 43 Put @1.40 -432.24
07/19/2012 STO 2 GDX Sep 22 2012 42 Put @2.41 470.50
In this latest option roll I was able to get paid $38.26 to roll down a strike AND to reduce my exposure to 2 contracts. By reducing the number of contracts we were able to reduce our maintenance requirement from ~$3200 to ~$2100 thereby freeing up money for other trades. In addition, our percentage return on maintenance increases with the reduction in required maintenance.
It had never occurred to me before to reduce the number of contracts as I roll down and out. Props to Teddi Knight at FullyInformed.com for sharing her experience and insight in that regard.
We have now collected $512.40 in option premium on this trade. Our cost basis if put to us is down to $39.44/share. While this ETF has sunk to new lows recently our cost basis is below that.
The September expiration will make this trade 6 months old. If the shares expire worthless we will earn $512.40 on an average of ~$2600 in margin maintenance. This equates to a return on maintenance of ~19.7% or or 39.4% annual.
03/20/2012 STO 3 GDX Apr 21 2012 47.0 Put @ .53 146.75
04/20/2012 BTC 3 GDX Apr 21 2012 47.0 Put @.63 -201.24
04/20/2012 STO 3 GDX May 19 2012 45 Put @.97 288.70
05/14/2012 BTC 3 GDX May 19 2012 45 Put @3.46 1050.24
05/14/2012 STO 3 GDX Jun 16 2012 45 Put @3.99 1194.68
06/01/2012 BTC 3 GDX Jun 16 2012 45 Put @1.20 - 372.25
06/01/2012 STO 3 GDX Jul 21 2012 43 Put @1.60 467.74
07/19/2012 BTC 3 GDX Jul 21 2012 43 Put @1.40 -432.24
07/19/2012 STO 2 GDX Sep 22 2012 42 Put @2.41 470.50
In this latest option roll I was able to get paid $38.26 to roll down a strike AND to reduce my exposure to 2 contracts. By reducing the number of contracts we were able to reduce our maintenance requirement from ~$3200 to ~$2100 thereby freeing up money for other trades. In addition, our percentage return on maintenance increases with the reduction in required maintenance.
It had never occurred to me before to reduce the number of contracts as I roll down and out. Props to Teddi Knight at FullyInformed.com for sharing her experience and insight in that regard.
We have now collected $512.40 in option premium on this trade. Our cost basis if put to us is down to $39.44/share. While this ETF has sunk to new lows recently our cost basis is below that.
The September expiration will make this trade 6 months old. If the shares expire worthless we will earn $512.40 on an average of ~$2600 in margin maintenance. This equates to a return on maintenance of ~19.7% or or 39.4% annual.
Tuesday, July 24, 2012
Profitable Trade: GDX Naked Puts
On Friday I closed the following transaction for a net profit:
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
07/20/2012 BTC 3 GDX Jul 21 2012 42 Puts @.55 -177.28
In this trade we generated $175.86 in 4 months on ~2600 in margin maintenance. This equates to a return of 6.76% or 20.29% annual. This trade shows the power of naked puts and the ability to roll them down and out for a net credit. Even though GDX continued to tank throughout this transaction we were able to still turn a profit.
This one was a bit too much of a wild ride for my temperament, however, so I will probably return to trading blue chip stocks with a rising dividend. Right now I'm watching the weakness in MSFT and INTC closely. If MSFT drops below 29 and INTC gets in the low 24's it will be hard not to pull the trigger on some new naked put trades.
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
07/20/2012 BTC 3 GDX Jul 21 2012 42 Puts @.55 -177.28
In this trade we generated $175.86 in 4 months on ~2600 in margin maintenance. This equates to a return of 6.76% or 20.29% annual. This trade shows the power of naked puts and the ability to roll them down and out for a net credit. Even though GDX continued to tank throughout this transaction we were able to still turn a profit.
This one was a bit too much of a wild ride for my temperament, however, so I will probably return to trading blue chip stocks with a rising dividend. Right now I'm watching the weakness in MSFT and INTC closely. If MSFT drops below 29 and INTC gets in the low 24's it will be hard not to pull the trigger on some new naked put trades.
Monday, July 23, 2012
Profitable Trade: Intel (INTC) Naked Puts
The following puts expired worthless:
07/09/12 STO 4 INTC Jul 21 2012 25 Puts @.26 90.99
We earned $90.99 in 12 days in this trade on ~$1500 in margin maintenance. This equates to a 6% return or 184% annual. The returns are so large as there was a quarterly report issued during the time of this trade.
I didn't see an opportunity I liked to roll out and/or down for a credit so I just let them expire worthless. I will look to trade INTC again should it drop under $25.
07/09/12 STO 4 INTC Jul 21 2012 25 Puts @.26 90.99
We earned $90.99 in 12 days in this trade on ~$1500 in margin maintenance. This equates to a 6% return or 184% annual. The returns are so large as there was a quarterly report issued during the time of this trade.
I didn't see an opportunity I liked to roll out and/or down for a credit so I just let them expire worthless. I will look to trade INTC again should it drop under $25.
Sunday, July 22, 2012
Profitable Trade: Proctor & Gamble (PG) Naked Puts
The following puts just expired worthless:
03/29/2012 STO 2 PG July 21 2012 62.5 Puts @.88 164.47
This was a 114 day trade with an average of ~2300 in margin maintenance. Our return on maintenance is 7.15% or 22.9% annual. I thought about rolling out the 62.5's but decided against it with the recent surge in the stock due to the Ackman intervention. In addition, I believe long term that Costco and Wal-Mart and their brand of products will continue to take market share from the more expensive PG products. That being said I will still sell out of the money puts when fearful dumping of PG stock occurs.
03/29/2012 STO 2 PG July 21 2012 62.5 Puts @.88 164.47
This was a 114 day trade with an average of ~2300 in margin maintenance. Our return on maintenance is 7.15% or 22.9% annual. I thought about rolling out the 62.5's but decided against it with the recent surge in the stock due to the Ackman intervention. In addition, I believe long term that Costco and Wal-Mart and their brand of products will continue to take market share from the more expensive PG products. That being said I will still sell out of the money puts when fearful dumping of PG stock occurs.
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