Back on April 17, I sold 2 PAAS puts. I sold two 07/20/13 $14 PAAS Puts @ 1.47. That post can be found here.
Since then I’ve had one of those puts assigned and the last put expires tomorrow. Since the put is in the money I will be required to purchase 100 shares at $14/share. Instead of letting the put expire I decided to close out the put for a small loss and sell a further dated put to make up the difference.
This practice is typically called “rolling” your puts.
Here’s what I did. I bought back the $14 PAAS 07/20 Put for 1.87 and simultaneously sold a Jan 18 ’14 $13 PAAS PUT for 2.32. Not counting commissions I’ve now earned an additional $55 and if assigned I will have reduced my cost of these 100 shares from $12.53 ($14 – 1.47). to $11.08 ($13 – 2.32 + .40). The .40 is the loss I incurred by buying back the original put for 1.87.
By rolling the put to a later date I feel I’ve reduced my risk.
PAAS continues to be my speculative options play.
I currently have 14 open options positions and a total options profit of $3058 for 2013. My options page has been updated accordingly.