Today I opened a new position on GOOGL (Google) a $500/495 bull put spread expriing in March 2015. Collecting $0.926 (per share).
I closed my position on $WMT (Wallmart) for $0.09 giving me a 76% capture representing an annualized gain of 34%.
The meat of this post: a ROLL:
Last month, I didn't know if I would be home on the last trading day of my $YUM spread which was expiring October 17th. So I ROLLED.
What does that mean? I closed the position for a loss, and opened a NEW position further out which completely covered the losses of the close and then some, thus giving YUM a chance to recover form the disasterous market pot-hole that we hit in mid-october.
As it turns out, the roll was unnecessary as the value of YUM moved back above my strikes, but by then it was too late as I had rolled 2 days prior. So the roll extended my time-frame and got me an extra $16.49 in the process. (There was more to collect, but it's time to move on from that position)
So for simplicity's sake, I'll fudge the numbers together to aggregate the 2 positions.
5 contracts of YUM Oct rolled to NOV $67.50/65 bull put spread
Position open: August 21
Position closed: Nov 5 (and rolled October 15th)
Position open: 76 days
Maximum Premium : $157.16+56.39 = 213.55 (max premium from each position)
Maximum loss: $1036.45
Closed @ 81% capture ($157.15+16.49 = $173.64)
Representing an annualized yield of 80%
Stay Hungry my friends!