Rolled SLB June 55 Naked Put Higher

I’ve been torn on how to continue managing my Schlumberger Ltd (NYSE: SLB) position.  I’ve been wrong for the past week or two on how fast oil was going to recover.  As oil continued to climb this morning, SLB tagged along as it should.  Once SLB moved up this morning my position moved to a paper loss if options expired today.  With less than eight full days to go I decided I needed to update my position some. 

The choices I was considering for changing my SLB options included buying back my June 55 naked call, selling a new naked put at $60 or rolling my June 55 naked put to a June 60.  I went with the last one.  SLB came out of the gates with a bang.  I waited and watched as SLB rose close to almost $60.00, putting me at a paper loss with a lot more room for further losses.  From there it eased down from its high and I put in a limit order to roll my puts.  Within a few seconds SLB rallied again $1.30 to $60.15.  I didn’t think it would hit go too much higher today and left my order with the thought that maybe by the end of the day it would come back into play.  Instead, only a few minutes later, while SLB was trading at $59.48 my order hit.  I bought to close two SLB June 55 puts (SLBRK) at $0.37 paid $75.50 with commissions.  At the same time I sold to open two SLB June 60 puts for $.182 each and received $352.50 with commissions.  That gave me a net credit of $277.00.

I made a profit on the June 55 puts, but I’m not celebrating that as much as I’m trying to work the overall series of trades into a profit.  I’ve taken in net $1,142.48 in premiums.  That gives me a profit up to $60.71 and down to $54.29.  If SLB closes between $55.00 and $60.00 my June 55 calls will sell 200 shares and my June 60 shares will buy shares, so I’ll be out of the position completely unless I buy one of the legs back before expiration. 

Here are the trades I’ve made on SLB during this latest run:

By the time I finished writing this post SLB was trading down for the day and even hit an intraday low of $58.00 not long ago.  I didn’t time my trade perfectly, but am still sitting on a potential profit where it is now.  That’s a good thing.