After my Freeport McMoran (FCX) July 105 naked put expired last week and assigned me 100 shares I sold those 100 shares when FCX rallied. The next day FCX dropped $8+. I thought my limit was going to hit for the September 95 naked puts, but I priced it too high. This morning I changed my order for a lower strike. While FCX was trading near $98.00 my order hit and I sold one FCX September 85 naked put (FCXUQ) and received $329.25 after commissions.
I thought that I should reduce my risk by selling a lower strike and the premiums met my trading model for projected returns. I’m glad I lowered my strike because FCX is down another $3.50 from when I traded on it two and half hours ago. Recharting it now, I can see why I lowered my strike, but can clearly see that I should’ve placed my limit higher.
My Cummings Inc (CMI) naked put expired worthless last week and I have been waiting for a new entry point to show. I waited too long and only saw CMI climb higher for the past few days. I priced my new limit order to hit somewhere close to when CMI dropped back …
As I wrote earlier today I had a lot of option assignments from this past Friday’s option expiration. Kraft (KFT) was one from earlier in the month as an early assignment. I held it for two weeks without selling covered calls on it. KFT closed at $28.70 the day before my shares were assigned. Today I closed my position when I sold all 300 shares at $29.45. I took a loss on the position as a whole since I bought at 32.50 and only sold one set of options, naked puts to start with. The premiums weren’t worth carrying the underlying stock.
As I expected, Freeport McMoran (FCX) would move back above my buying price of $105.00, so I sold while it was up above where I bought it, but not at the high of the day as luck would have it. My goal was to get out without losing on the stock itself so I could and just be happy with the premium received. I can rewrite naked puts without worrying about the wash rule not allowing me to take losses on the stock since I don’t have any. I accomplished the first half and made and …
I’m still trying to get my bearings after missing the past two trading days and not even returning from vacation until Sunday evening. Since I’m just now trying to get my hands around what happened I haven’t figured out all of my exact profit and losses for each position with so many balancing trades that countered each other out. These are the expiration details of my 16 different July options.
Alcoa (AA) closed at 33.81. My July 35 and 47.50 calls expired worthless and my two July 40 naked puts were assigned. I’ll write covered calls on it this week.
Burlington Northern (BNI) closed at 94.57 and my one July 105 naked put was assigned. I’ll write covered calls on it this week.
Cummings (CMI) closed out of the money at 66.32 and my July 60 naked put expired worthless. I have a limit order to get back in with two more naked puts.
DryShips (DRYS) closed out of the money at $76.86 and my July 70 naked put expired worthless. I don’t know what I’m doing with it again, but expect to look a new naked puts.
Eaton (ETN) closed at 72.92. I took a loss on this one overall. My July 90 put was in the …
I’ll be away for the next few days and will not be posting until after options expiration. I don’t think I’ll be back in time to get an index chart up this weekend either.
I’m going to a family event for my wife’s side of our family in New York. If it was my decision it wouldn’t have been planned for options expiration Friday, but I guess not everyone tries to revolve their plans around the markets.
After selling two naked calls on top of two other naked calls on MHK I might take a hit. MHK has rallied more than $7 in the past two days and is $0.70 from being in the money forcing me to be short the stock. I don’t even know if TD Ameritrade has shares for me to short (aka borrow to sell). I have naked puts at the 65 strike too, so if it’s below that, they’ll wash each other out. I’m expecting a cool down on it. If it climbs more than $0.70 I’m taking what I get unless I make a trade over my cell phone (not likely) at the end of Friday. I’d be short 400 shares and would beg for another drop in price (likely).
Mohawk (MHK) has been falling steadily since the end of May. I started with two naked puts at the July 65 strike (received $348.50) and chased the profit with two July 65 naked calls (received $148.50). MHK kept falling, so when I charted it again yesterday afternoon to see where I thought support could be found. All I could see was that it was at a hitting the trend line of lower lows and was at a 52 week low. I expected a slight bounce, but not high enough to avoid being assigned the 200 shares from my naked calls on Friday, four days from then.
The trend line of lower highs was coming in just above 60, so I entered a limit order to sell more naked calls while MHK was trading at 57.60. Today, while MHK was trading at $59.94 I sold two MHK July 60 calls (MHKGL) and received $258.50 after commissions. This brought my total premiums received up to $755.50. If MHK is above $60.00 at the close on Friday I’ll be assigned 200 shares and will sell covered calls to bring my position back to a profit. If MHK is above $60.00, I’ll take a $250 loss and move …
ETN was down more than $10 this morning. That’s over 13% down from yesterday’s close. I planned to wait until after Friday’s options expiration to sell calls on it, but decided I had to cut my losses sooner rather than delay it.
While Eaton (ETN) was trading at $69.28, I sold one ETN July 70 call (ETNGN) and received $159.25 after commissions. ETN came off its low of $68.75 soon after I made my trade. I could’ve made another $100+ if I waited 15-30 minutes.
I originally sold a July 90 naked put (ETNSR) and received $219.25, so this gives me $378.50 to cut into the $2000 I’ll lose on the stock if ETN closes above $70 when options expire on Friday, three days from now. Losing more than $1600 is pretty bad, but I’d rather have that loss wrapped up than have my losses get bigger. If ETN does stay below $70 at the end of Friday, I’ll write new covered calls and reduce my loss a little more. Just to throw a wrench in this, I’ll be on vacation Thursday and Friday and won’t have access to my account to close any of these close options rather than take the assignments.
I’m charting the oil ETF USO again after I last charted USO at the end of May. I drew a few trend lines then and as our (those who eat and drive) bad luck would have it, the shorter trend line of higher lows held support. That same line is still holding and the price of oil looks like it still has room to climb. USO is also an optionable ETF making it an easier trade to make using less money.
The best part of the chart for oil bears is that USO (note that USO’s price does not equal the price of a barrel of light sweet crude, but moves in the same patterns) just hit a ceiling of higher highs that has offered a stopping point for the rise for the past month. That would lead us to believe that oil should drop some next week as it digests the run up that it had on Friday.
Oil bulls have a lot more ammo to support their argument for longer term upward price movement. USO just moved back above its 10 day moving average and its middle trend line that disregards the one to three …
I saw T. Boone Pickens on CNBC earlier this week talking about his plan to reduce our dependence on foreign oil. Wind is a major part of the plan. Natural gas is also a part of the plan. He plans to make his money on the wind farms he has bought the land for and plans to develop. He mentioned the uses for natural gas a few times and that led me back to Chesapeake Energy Corp (CHK).
I planned to look it up earlier to see how the options were moving and forgot to do it for a couple of days. When I saw the markets down big this morning I remembered to look again and saw CHK up nicely. I checked the chart and saw CHK gapped up today and also saw what could be support around $58 based on the rising trend line of higher lows. That’s also close to the 50 day moving average. I was looking at August puts since the September contracts aren’t posted yet and started to place a limit order at the 57.50 strike, but changed it to the 60 strike to bring in more cash flow, albeit with a greater risk.
I’ve sold Apple (AAPL) options a few times and have an overall profit from my series of trades. I don’t like taking big risks with it since it is so volatile and try to sell naked puts far out of the money (OTM). I like trading it due to its volatility too. That makes the premiums much richer.
This morning, while AAPL was at 175.04, I sold one AAPL August 155 naked put (APVTK) and received $399.25 after commissions. That’s $20 OTM meaning AAPL would have to fall more than 13% in the next five weeks for me to take a loss on it. I could see AAPL coming back down to closer to $160-165 based on the chart, but don’t think it’ll drop below $155 (or $151 if I want to think about a break even trade). It’s holding above its 10 day moving average right now and although it closed below its 20 day moving average yesterday it is back above it today. To the higher side, $180 could be a near term ceiling with the 50 day moving average hovering around there. If it moves in that direction pretty soon I’ll have to consider naked calls far out of the …
