Sold IWM October Naked Put

I was focused on my other taxable account today, but was doing my research on Interactive Brokers’ platform, where keep this account. When I decided on my trade, I made it in this account I blog about instead of my TD Ameritrade account. Luckily, I wasn’t overly allocated to small caps in the My Trader’s Journal account before the trade, so I kept the trade in place and didn’t try to make a quick exit/reversal.

While IWM was trading at $139.56, I sold one IWM October $137 naked put and received $187.41 after paying $1.59 in commission. It’s a relatively small premium, but the contract expires in about six and a half weeks from when I sold it. The short duration pushes my annualized gain potential to 11.14% with a 3.18% cushion before I take a loss.

This trade pulls my account up to being 97.95% invested with three positions set to expire in seven trading days from now. I might close my MDY naked put this week and roll it out to October and at a lower strike. I’d rather sell the November contract, but it’s not available yet. My XLF naked puts should expire worthless, but as week as XLF has been over the past few weeks, there’s no telling if that’ll work for me. I have a limit order to sell my other IWM naked put that’s in the money if it works out to a small profit for me. Otherwise, I plan to take the assignment and sell a covered call on the shares.

You can find my YouTube trade video here.

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