Closed EXPD Naked Puts Position for a Profit

I made an adjustment to my trading model recently.  I used to let all of my positions remain in place until options expiration and take the assignments whenever they were in the money at expiration.  I changed that a few months ago and started rolling some before they expired or were assigned.  The other part of that change is that when an order hits I go back in within a few days and enter a low limit order to close the position if I can get a vast majority of the potential profit in the near term.  It takes risk off the table for a trade where I don’t have much to gain by leaving it in place.  I used to make the assumption that if it was that far out of the money I was safe and every dollar of time value was worth getting.  I’ve since learned that it doesn’t always work that way and it’s better to take profits while I am in a place to do so.

10 days ago I entered a limit order to close my EXPD puts if the option premiums dropped enough.  Late this morning (a day before my limit order was set to expire), when EXPD was trading at $36.81, I bought to close three EXPD October 30 naked puts (URPVF) for $0.10 each and paid $42.24 with commissions.  At the beginning of the month, I sold these EXPD naked puts for $1.00 each and received $287.75 after commissions.  That gives me a realized gain of $245.51 in just two and a half weeks.  These options had another four weeks remaining and the most I would have made by not selling now was another $30 not counting commissions I paid to get out early.  Now I’ve freed up more reserves to go after another stock and its options.  Even if I don’t use the money for anything else, it’s still good to have that small risk off the table when so little reward was left in the options.

EXPD has had a great run recently and might be due for a pull back soon.  If it does dip much, I’ll get back in again.  If it only flattens for a couple of weeks, I’ll have to consider the November 35 puts.