On 01/30/13 I sold a 09/21/13 $85 PM Put @ 4.23. If I waited until September and this put expired worthless I would have collected $423 in premiums.
This trade was originally posted here.
Since 01/30 PM has had a nice share price rise and I decided to buy-to-close this put at a price of 2.46 costing $246 plus $10.76 in commissions.
My profit before commissions was $177. I had a commission of $10.76 to sell the put and another $10.76 to buy the put back. This left my total profit after fees to 155.48. Fees ate up 12.2% of my profits. This is better than my average of last year that I posted in my yearly options update here (over 15%) so I can live with that.
Since I’m trading in a marginable account, I didn’t have to hold $8500 in the account, I only needed an average of $1000 to secure this put. This amount would fluctuate a little daily depending on the price of the put.
I earned 15.55% on my $1000 in only 22 days! This is an annualized rate of over 250%.
Another reason I wanted to close out was that I have a lot of open puts. In the event of a big market correction, I could have to come up with a lot of money to purchase shares. This is always a risk and the reason I’ve stuck to selling puts against companies I want to own anyways.
This brings my profit from options to $910 for the year. I have 14 open options positions, with $10k in cash in my options account and currently $3k in non-marginable purchase power.
I’ve updated this trade on my options tab.