Naked Puts on Foster Wheeler (FWLT)

You might think I’d learn my lesson on FWLT.  I’ve entered into two positions in the past year that would have been profitable if I had held on, but when it started to dip, I bailed.  I haven’t taken much of a loss on those positions yet, but missed out on nearly $1,000 by not staying short.

Well, I’m back on the FWLT train as of this afternoon.  While it was trading at 131.20, I sold one November 120 naked put (UFBWD) and received $489.25 after commissions.  Maybe I should sell puts on this company only one month out since it seems to move in such big swings.  The time value would work more in my favor with only four or five weeks to run down.  I thought about selling a Novembre 115 put, but opted for the 120 since I can see potential support at 120.  Maybe a better move would have been to wait for it to fall towards that support area instead of getting in now, but I think there will be a longer run with it now that the Fed has cut rates and appears ready to do it again next time around.  At least if I bail again all of you will know it’s time to buy because FWLT will likely double, again.

This is my first option sold for the November strikes, so I’m hoping it lays a profitable foundation for the month.

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