October Option Expiry

As I mentioned earlier, October was another very good month for me.  I had options on NYX, AAPL, CHTT, JOYG, PCU and CRDN.  All finished out of the money for me, even after the strong pull back last week.  I never even had to do a gut check on what was happening with so much cushion between my strikes and the underlying stocks’ prices.  DISH is the only one I exited early and shouldn’t have.  It closed $4+ out of the money and cost me $30 to close with a profit.

When I sold my AAPL naked put I said I think I’ll regret going so far out of the money.  My strike was at $120 and on Friday AAPL closed at $170.42.  I left a lot of money on the table there, but at least I made a good profit and that’s what selling naked puts is all about – taking the smaller profits and moving on.

Speaking of moving on, I wrote about my CAT option being assigned to me at the end of Friday’s trading session.  I’m debating moving on from it.  It’s down with the rest of the market this morning and makes me overweight for November contracts at the beginning of another possible correction.  The WSJ had a slightly optimistic piece on CAT, but I think I need to cut my losses while they are small.  On the other hand, I could see CAT hitting 70 and finding support.  CAT hit an intraday high of 87 in July and pulling back to 70 would be a substantial pull back that could offer support, not to mention that’s the range of where CAT gapped up in April and then found support in August. 

My cost after commissions is around 72, so I’m actually still sitting on a paper profit if the naked put expired today.  The other “option” I have is to sell a naked call on it.  I could end up doing that for November or even December.  Selling a naked call at a 75 strike would move my profit/loss boundaries out to 70 and 80.  Any price action in between those marks would be a profit for me. 

Since I started writing this post 30 minutes ago and going back and forth to the chart, CAT has come up from its lows of the morning.  Not panicking by keeping a trader’s journal and getting my thoughts straight has paid off again.  At 9:53 am, CAT is now up for the day by $0.01.  That’s great news after being down nearly $1.70 for a few minutes.

I’m keeping the My Trader’s Journal Sentiment indicator on my home page as Neutral, with a bearish undertone for now based on yesterday’s chart I drew.