FWLT Naked Puts – Closed Out Position

I wrote about Foster Wheeler (FWLT) a couple of times last week and searched for my correct exit point as I took big percentage losses on it.  Then FWLT stopped falling as most of the markets continued to fall so I changed my limit order to buy my put back.  I moved to a near break even point from where I sold the August put and when FWLT decided to turn around on late Friday and took a big leap up.  At 3:33 Friday afternoon, my limit to buy back the August 105 put hit and I took a realized loss of a whopping $11.  Three minutes later FWLT was up another $1, but I had already gotten out.  FWLT finished the day within a nickel of where I got out, but still up over $3.50 for the day. 

I think I was right in saying the short-term fall was over for FWLT, but I’m not upset for getting out.  It’s still $4 ITM on the option I held and I understand that it could wipe all of that away today, but I think the markets still have a little shaking to do before we have a serious turn back up and FWLT is too volatile for my outlook these days.  It’s a good company and will likely do well over time, but I feel I can find another play for my money right now that’s safer and will come back to it later.  With only an $11 loss write-off at stake, I won’t feel hampered by the wash rule if I decide to get back in sooner than one month.

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