Sold DuPont (DD) Naked Puts

Possibly just out of boredom, I pulled the trigger too early on DuPont this morning. The chart said it could fall to 48 and maybe even as low as 46 before regaining support, but I admittedly got anxious and put my limit in too low, in between the bid/ask.

While DD was trading at 49.64, I sold two May 47.50 (DDQW) naked puts and received $228.50 after commissions. I still have a good cushion to make it work, but without being bullish on the market right now, I should’ve priced my order for a dip.

I have only three options set to expire in May so far (including this one). So I know that played a factor in my mind, but I really should know better than that. I’d have been wiser to place a higher limit and save my cash reserves for other positions that will become more attractive as we drift lower. I’ve looked at selling new uncovered calls, but with the VIX falling lower again recently the premiums don’t seem worth the risk for me.

More on this topic (What's this?)

DuPont Earns $1.61 a Share, Revenue of 11.2 Billion (ValueWalk.com, 4/19/12)

DuPont Shows Off New Safety Glass (eMoneyDaily, 4/18/12)

DuPont Opens Doors On New Research Facility (eMoneyDaily, 4/10/12)

DuPont Is A Great Buy-And-Hold-Forever Stock (Investment Underground » Page n..., 12/30/11)

Read more on E.I. du Pont de Nemours & Company at Wikinvest

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