Wednesday, October 30, 2013

PUT it there suckers!

So, all thanks to Liquid ( I'm writing a drunken post...

I'm not here to boast.

I'm not here to brag.

I'm just here to tell you what I've done:  All nets and costs are AFTER Fx (exchange)

October 10 I SOLD 1 TNA $57 PUT for $0.70 netting $61.01
October 15 I CLOSED the above @ $0.29 at a cost of $41.69
Profit $19.32

October 15 I SOLD 2 TNA $60 PUTs for $1.25 netting $246.11
October 18 I CLOSED the above for $0.12 at a cost of $37.61
Profit $208.50

October 21st I SOLD 2 TNA $69 PUTs for $1.62 netting $320.68
October 25th I CLOSED the above for $1.02 at a cost of $226.02
Profit $94.66

Capital required = Strike price * 100 * No. of Contracts.  Thus for my last trade:
2 puts @ $69 Strike * 100 shares per contract = $13,800.

This capital would have been used to COVER if the option had expired IN THE MONEY.  Which none of them did as I closed ALL of the positions BEFORE expiry.

I did have a couple assignments a month or two ago.  I was able to take the position, hold for a few days, and sell at a profit once the market resumed it's upward course.

NB:  Why am I doing these crazy shenanigans???

1. I'm expecting the US market to do any of the following:
a> go up
b> go sideways
c> go down somewhat.

If it tanks then I get stuck with the shares, or close out my option at a loss.

Also, detail oriented readers will note that the premiums I'm collecting go UP tremendously after the first listing.  Why?  I changed my strategy somewhat.  Instead of calculating how much the market "might" go down to keep me clear from owning the shares (and riding out the option to expiry) I've decided that I'm OK taking $TNA and holding it for short periods of time.  Thus I've changed to selling PUTs that are AT THE MONEY.  Hopefully with the expectation that I WILL be assigned the shares.  But so far I get a juicy day or two of "time-erosion" and I close out the position to keep the profit and cut off my risk.

Clear as mud?

Stay HUNGRY my friends!

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