Marathon Oil (MRO) Stock Chart

I sold puts on MRO on June 6th and have written about it a couple of times since.  Today I’m visiting it again because it has moved close to its rising trend line of higher lows.  After a month and a half of a bumpy ride that included a 2 for 1 stock split, I thought I was safe to let my puts expire worthless and get back in on the next dip.  I was off by a day.  MRO dropped as low as 60.88 early this afternoon.  I’m in-the-money now by more than $1.00.  I could still get out with a profit if I bought my puts back now, but I’m banking on (literally) MRO making a come back next week as it bounces off this trend line I’ve drawn plus its 50 day moving average.

MRO is on the low range of it’s historical p/e ratio range and has a bright future as illustrated in The Street’s article where they named it one of the “Top Five All-Around Value Stocks”.  This might be a gift to actually get into MRO on a dip like this.  Yet another good example of why selling naked puts can be a great strategy.  Without the puts, I might have let emotions get the better of me and not bought in, as it appears I will be after expiration.  The other two puts (CHK & ARRS) I sold on June 6th (when the market was giving us a head fake as if was going to actually stop going up) are both expiring out-of-the-money.  The same goes for the rest of my July puts on WDC, MON, DJO and AA.  I’ll figure out my realized gain after everything settles on Monday.

Click on the thumbnail for a full MRO stock chart.

In other option expiry news, I’m glad I got out of T since it still hasn’t recovered from the latest dip and I would have lost 100% of my small investment if I had held on.  Also, my CAT covered call was assigned to me in my IRA a couple of days ago.  CAT announced earnings yesterday and its price dropped over $7.00 at open.  That would have been below my strike, but it has since recovered some making the early assignment moot.  Although, now CAT is back in the lower range that might be worth considering making another trade on it.

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