Sold XLB Covered Puts

The market is crazy today and I’m trying to capitalize on the VIX ($VIX.X) being up to the mid-50s, higher than it’s been in more than 20 years (could be ever, but that’s as far back as my chart goes).

While at $27.21, I sold four XLB October 25 covered puts (XLBVY) for $0.75 each and received $287.00 after commissions.  These are covered puts, not naked puts because I already bought November 32 puts.  If I can pull a profit on these puts I’ll write new puts for November.  I don’t know what the strike will be since that’s so far away.  Seven days is an eternity lately.  If these new puts go in the money deeper than the premium I received, I’ll probably take the assignment since I’ll be covered dollar for dollar to the downside, but could profit nicely if XLB rebounds before my November 32 protective puts expire.

I stand to lose money if XLB rallies and I take a loss on the November puts and only cut that loss by the $287 I received today.  If that happens, I’ll make more on my other long positions and won’t feel the urge to complain.