Motorola (MOT) Naked Put Options Trade

Jim Cramer mentioned Motorola last night on Mad Money as a good stock pick right now. Generally his picks will spike for a couple of days and then drop back a little below the closing price from the day before he pumped the stock. I checked it out last night and thought the chart looked like it might hold close to where it was now if not only down slightly.

Two minutes after opening this morning, while MOT was trading at 19.20, my limit order to sell five November 19 naked puts (MOTWT) hit and I received $326.25 after commissions. I thought I was putting the limit high enough that it wouldn’t hit for a couple of days until there was a pullback, but MOT dropped at the opening today and the premiums sold for as much as .75 before settling back again. With a little over a month before expiration, the annualized return should be good on this trade if it plays out in my favor.

With this trade, I have sold enough November contracts to know that I need to balance my portfolio with more trades focused towards December. I don’t want to be stuck in a position after the November contracts expire that I have to re-write much more than half of my options.

Read more on Motorola at Wikinvest

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