Sold BA October 50 Naked Puts

I’m still on vacation this week while my wife is working and my son is at school.  That means I spend my days rotating between getting stuff done around the house that I’ve been meaning to do since we moved in three and a half years ago, watching CNBC, getting all of my doctor appointments out of the way, catching up with old friends and studying for the Series 65.  It’s been a boring week on the markets from my seat, so I was excited to see something I thought worth trading on today with Boeing’s (BA) announcement that they were going to have their 757 airborne next quarter and start deliveries by the end of next year.

The delay in the 757 is what started my demise with BA a while back and now I’m hoping that the confirmation that they plan to get it off the ground will make some money for me this year.  While BA was trading at $51.45 I sold to open two BA October 50 Puts (BZDVX) at $2.00 each and received $388.49 after commissions.  Implied volatility for this strike was only around 35, which is on the lower side for some of the trades I make, but fair enough.

I decided to get back in with BA because of the news I just mentioned.  I picked the 50 strike because it’s below the current trading price (i.e. out-of-the-money) which gives me close to a 7% cushion before I’m sitting at a loss.  The chart showed that BA gapped up on the news, but even if it pulls back to the intraday highs from earlier in the week BA shouldn’t come back below the upper $48 range, keeping me with a profit.  I went with the October expiration to increase the premium a little versus the September expiration so I could have better dollar and time cushions for any bouncing around BA does for the next few weeks.

My vacation continues for another day and a half.  I’m going to lunch today with the guy who first introduced me to options nearly a decade ago.  That should be fun to catch up with him.  My cholesterol is back in check (thanks to the meds and some slight diet changes).  I had a steroid epidural/injection in my neck last Friday for my disc issues and my neck/back are feeling a little better which means I’ve been taking less drugs this week in prep for the start of my new job on Monday.  I thought it wise not to be too cloudy headed my first week.  I’m not sure when I’ll finally take the Series 65, but plan to finish the thick study book this afternoon and begin practice tests tomorrow.  As boring as parts of it are, I’m learning a lot and think I’ll be a better investor because of it.