On Thursday I closed out a PM put for a nice profit. Right afterwards I saw there had been some short-term weakness in the share price of one of my holdings, CAT, and decided to set a limit order. My limit order ended up filling towards the end of the day.
The Trade:
I sold 1 CAT Aug 17 '13 $85 Put @ 4.00
If I wait until expiration I will get to keep the entire $400 in premiums or I will be put 100 shares of CAT at a cost of $81/share. I can live with both of those outcomes. If shares of CAT appreciate before Aug 17 then I may decided to close out the put early in the same way I did with the PM put.
I now have 15 open options positions and my options page has been updated accordingly.
wow, that is a juicy premium! I like (and learn) selling puts on stocks which I want to own. Before I was scared of assignment until I realized it can be a good thing if you sell it knowing you are OK with both outcomes. I wish I have more money to do this more often.
ReplyDeleteThanks Martin, it is a nice premium but I also have to come up with a lot of money if it gets assigned. As you point out, if you are happy with all outcomes then it is a win-win scenario.
DeleteThanks for stopping by!
Interesting take on cat options.
ReplyDeleteHi Quality Stocks,
DeleteI figure if I can buy more of a stock I like at a price that's at least 10% cheaper than my cost basis or get to collect $400 if CAT shares go up then I win either way.
Take care!