Closed CMI Naked Puts for a Profit

CMI traded up over $60 briefly this morning putting my naked calls in the money.  Then it fell back below $60 putting my naked puts back in the money.  When I saw it back down around $59 I debated if I should close both options for a profit or let them both expire, one in the money and one not.  I decided $60 was too high for CMI right now and that it would probably pull back some.  With that decision I next chose to close my naked puts and let the naked call ride through the rest of the afternoon as long as possible. 

I started a little under the then current bid/ask prices and missed a better price than I ended up with.  While CMI was trading at $58.12 I bought to close two CMI September 60 naked puts (CDMUL) at $1.95 each and paid $401.49 with commissions.  On July 24, 2008 I sold these naked puts and took in $488.50 after commissions.  That gives me a realized gain of $87.01 plus the $98.50 I took in from the naked calls I sold on September 16, 2008 that I hope make it the next 75 minutes without going back in the money.

I planned to sell new naked puts for October immediately after this order hit, but I want to see if this rally is short lived before I jump back in deeper again.  Buying these naked puts back gets me out of the margin hole I was stepping into this options expiration.  To up my cash position, I’ll have a couple of my long positions (VIP, BNI)  called away with covered call option assignments and will be writing new covered calls too.