Closed AXA Position + Account Status

I hated to do it, but I think it was the smart move to take my loss on AXA and move on.  It broke support a couple of weeks ago and fell below my strike.  That’s when I should’ve gotten out, but I thought it was going to be a long term hold for me.  Then they came out and announced they were voluntarily delisting themselves from the NYSE.  Perhaps there was some knowledge of out there in advance or some insiders took advantage of it.  Either way, the stock fell, but then it recovered and I thought it might work out for me.  I still like the fundamentals and figured I could risk a few down months because it’ll be back up before long.  With AXA’s delisting planned for as early as the end of this quarter it can no longer be a long term hold.  It’s been getting beaten up bad the last couple of days and instead of waiting for a bounce off its lows, I chose to cut and run.  While AXA was trading at 19.35 I bought to close four AXA February 22.50 naked puts at $3.30 each and paid $1,322.86 with commissions.

Originally I sold these AXA options for a net total of $297.20.  This gave me a realized loss of $1,025.66 on this position.  The good news is that I had $9,000 set aside to back my puts.  Now that’s more cash I can put to work elsewhere when I feel we’ve hit a bottom or are at least closer to it.


I put this basic spreadsheet together with prices from just after noon today.  It shows me how I’m doing overall and how heavily invested I am right now.  Yellow options expire in February, orange in March.  I left my AXA trade in here with my realized loss in the right column.  The summary of it all is that I’m down about $1,622 from where I would have been if I had not sold any of these options.  (This does not use the current option prices.  I’m considering what the value would be if they expired at this minute without time value.) For my one long position, UCO, I have edited my cost per share with each option premium I’ve sold starting with the naked puts that got me into the position originally.  I’m left with $20, 462.90 before I’ll need to go on margin if everything is assigned and I don’t buy back any more options.  That’s almost 79% invested for me right now.  Clearly I started adding new positions too early into this correction, but I’m glad to have $20k to work with when I decide the time is right.


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  1. Comment by R Pell

    If you still like the stock as a long-term holding, is its delisting really enough of a reason to take a loss now on the position? You could still own the shares OTC (which is admittedly a bit of a pain).

    I might have considered rolling the options down and out to potentially avoid/reduce the loss and/or enter the position at an improved price – for example, by buying back the four February 22.5 puts for $1025,66 net and then selling four (or five) July 20 puts at 2.30 for about $920 (or $1150). If the stock’s above $20 at expiration, the loss is minimal (or avoided completely); if it’s below $20, you end up owning the stock at an even better cost basis ($20) than your original potential entry point ($21.75).

    (That said, I personally don’t have an opinion on AXA and whether $20 represents a good value or not.)

  2. Comment by Alex Fotopoulos

    Good input R Pell. I didn’t want to own the OTC shares. I figured the shares would be traded to lightly and any OTC options wouldn’t be worth the hassle. I couldn’t roll the options out as far as July because AXA may voluntarily delist as early as next month. Those were two of the main factors for my descision, but I also decided I could use the cash better elsewhere. That’s what made me finally pull the trigger. Having ~$8k ($9k-my loss) to have in cash for piece of mind or to invest in something else next week is better for me.

  3. Comment by Doctor Stock

    Every time I read here, I become more an interested in trading options… how about some 101 lessons? particularly examples,

  4. Comment by Alex Fotopoulos

    I have some articles I’ve labled in the “Beginners” Category on the upper left sidebar. Some of those might be more of what you’re talking about for more 101 details. Also (and this goes for anyone), shoot me an email with any specific questions and I’ll try to work up a post to address it if I think I can cover it well.

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