Closed DIA Short, Added to USO Calls and Sold SSO Naked Puts

DIA

I started the morning by taking a profit.  On October 17th I sold two November 83 puts (DAVWE) at $4.30 and received $848.50, today while trading DIA was trading at $88.02 I bought to close DAVWE at $3.50 and paid $711.49 with commissions.  That gave me a realized profit of $137.01 for this trade.  I’m still long (aka own) two December 84 puts which I’m holding as a small hedge.  If the Dow falls much more I’ll probably sell new November puts and try to make another short term profit although that will eliminate my hedge.

USO

I sold a covered call out of the money on Monday on USO and should have gone in the money.  I sold an extra one this morning at open while oil was falling.  While USO down to $55.82, I sold one November 60 naked call (USOKL) at $3.00 and received $289.25 after commissions.  Again I sold out of the money, but this time I was selling naked (only own 100 shares and am short two calls now) and wanted to give myself more of a cushion.  The difference between the at the money premiums and the $3+ out of the money premiums wasn’t enough to justify my selling at the money.  I expect oil (and USO) to bump around some for a while and come back one day when the economy turns, in whatever year that is.

SSO

A few days ago I entered a limit order on SSO, a double the S&P 500 ETF.  Today while trading at $29.50 I sold two November 25 naked puts (SOJWY) for $1.30 each and received $248.50 after commissions.  At double the S&P 500 beta this ETF is very volatile which of course increases the premiums and the risk.  I misjudged the change in premiums by a large amount and could have done much better with my sale this morning.  I think I’ll be safe when November options expiration come around because I think we could dip as low as $25.00 again for the SSO as we retest the lows, but don’t think we’ll stay down there long.