Rolling Options on INTC Naked Puts

I sold February INTC Puts last month and took a realized gain on the options this afternoon.  I considered buying my February puts back and leaving it at that, but decided I could take a little risk on INTC since I think the downside is limited.  INTC has been working through a trading range for months and is at the high end of it right now.  That leaves a few paths for INTC to take by April options expiration.  It could fall back into its trading channel and finish lower eight weeks from now, but ready to rebound or it could finish about where it is now (which oddly is where it was when I sold the February puts) or it could break out from this consolidation phase.  Whichever way it goes, I think if I’m going to be invested in the markets, INTC is a key core holding while we come out of a recession and by using naked puts my chances for a profit increase significantly.

With all of that in mind, I rolled the February puts to April expiration.  In other words, while INTC was trading at between $20.87 and $20.77 (yes, it took two attempts to make the order work) I bought to close four INTC February 21 naked puts at $0.14 and $0.24 and sold to open four INTC April 21 naked puts at $0.94 and $0.99 and received $304.29 after commissions.

I kept the exposure to 400 shares, but pocketed more money and lowered my cost per share again with this trade.  The options I just closed are a great example of why selling options can be so much more profitable than the old buy and hold strategy.   I pocketed ~$280 on $8400 backing it.  That’s better than a 3% gain in six weeks while the underlying stock stayed flat.

In my February Options Expiration post yesterday I said I thought I’d open a new CVS position when the April options were posted, but now I’m considering waiting for a dip in the share price again before I do that.  CVS hit resistance today at its January intraday high and I want to see how the stock reacts to that before I sell new puts.  $33.00 looks like it could be touched again if CVS drops to its rising trend line of higher lows.  If it does, that’ll be a great place to get back in for me.  I’ll try to get a chart of it posted next week if it starts acting like I think it will.  Closing above $34.40 for a couple of days could be a real bullish sign too.

UCO finished above my strike as expected and my shares will be called away.  I made the right move on it by selling the calls since UCO finished in the money less than I sold the calls for.  I thought about buying those calls back a few days ago when UCO started climbing, but decided it was time to exit and start over with new naked puts on a dip.

I still think the $18.00 area is the floor for NDAQ, so I’m going to give the shares I’m about to be assigned time to climb before selling covered calls.  NDAQ moved above its short trend line of lower highs and Williams %R indicator is picking up for it too.  Both of those indicators make me want to wait for a better exit.  Until I sell covered calls on NDAQ I’m sitting on a paper loss.  At least my other three options that made it to today were profitable.