I bought back the CELG naked put I had for last week’s June option expiration.  I would have done better to let it get assigned and then either sold the stock for a profit (trading at 61.30 now at 1:41 Tuesday) or sold a covered call on it.  I didn’t have a good feel for where CELG was heading since it had faltered lately and opted to take a profit while I had it.

After I bought that naked put back on Friday, CELG seemed to have found support.  I charted it again this morning and put an order in to sell two August 55 puts and not much later I changed my mind and switched it to the August 60 strike.  While CELG was trading at 60.20 I sold one August 60 naked put (LQHTL) and received $309.25 after commissions.  I started with only one option instead of the original two I had a limit order on at the lower strike.  With this option so much closer to being at the money (same price for current stock as option’s strike) the premium I received was as much for one option as it would have been for two.  If CELG continues to climb, I might …

I’ve only made one trade for August options expiration and that was a covered call.  I just can’t find the stocks I want to sell naked puts on.  I have one limit order in to sell naked puts on NVDA again.  It’s been more than 30 days since I took my losses on it and now that the wash rule doesn’t affect me, I’m thinking about getting back in.  I sold at 20 and 22.50 and it’s trading close to 20 right now.  I made the right move by letting my shares get called away so I could take the losses for tax purposes and now am eyeing the August 17.50 naked puts.

I read an interesting article on MarketWatch today that painted a gloomy picture of where the markets are heading based on the charts.  I think he’s on to something which explains my lack of trading.  I’d rather miss a short rally than get spanked too bad on a hard pull back or longer bear market with too much invested and not enough cash ready to put into play at cheaper prices.  If I miss an upward swing, so be it. 

I added another $15,000 to my money market (NPLXX) …

Since I bought my covered calls back on VIP on Friday, I wanted to cover them with new calls today as soon as I saw VIP wasn’t heading up again yet.  I bought my calls back with the hopes that VIP would rally soon.  Since I can’t take hope to the bank, I took some risk out of my position and covered early this morning.  While VIP was trading at 30.03 I sold two VIP August 30 calls (VIQHF) and received $438.50 after commissions.

Eventually I expect to take a loss on my shares, but for now I’m going to continue to milk the options for everything I can.  Since I can’t change the fact that VIP has fallen as much as it has since I sold my naked puts that were assigned I have to deal with what I have.  There’s really no benefit in worrying about where the stock has been.  Selling the covered calls could give me a 7.3% return in two months.  That’s a 41% annualized profit if VIP stays flat for the next two months.  Of course it won’t stay flat, but I’ll be happy to see it bounce around $28-$32+ until I can get out.  If I can get out …

When I first charted the Dow Jones Industrial Average, aka DJIA (ticker: $DJI) this morning I looked at the three month daily chart to see how bad the short term looked.  I missed charting last week, but would have pointed out the trend line of lower highs would need to break before I turned more bullish on the DJIA.  That line was tested on Tuesday and didn’t break.  Instead, on Friday, the trend line of lower lows broke and even closed below this line.  That’s a fairly bearish indicator.  Closing below that trend line on Monday and Tuesday would be very bearish.  In this chart you can see that the 10, 20 and 50 day moving averages are all above the current price.  That’s bearish.  I even went back to check on the 100 and 200 day moving averages and they are well above the current DJIA price.  This looked so gloomy I turned next to a long term chart to see if the story was the same.

Looking for a chart that was more stable I switched to a five year monthly view of the DJIA.  The three month chart above told …

June 2008 turned into another profitable month for my short options to expire.  Most expired worthless and the others still gave me a profit.

These first three took some extra thought today since they did not expire worthless.

I sold three DIS June 30 covered calls (DISFF) for $2.35 in the money after taking a naked put assignment at the 32.50 strike.  It expired in the money still, but not by more than 2.35, meaning I could’ve bought the calls back for a profit.  DIS closed at 31.94.  I will be forced to sell my 300 DIS shares at 30 although DIS is trading above where I initially bought it.  I made $302.75 from the original naked puts and $692.75 from the covered calls.  That’s $995.47 that I received in premiums.  I’ll take a loss of around $770 on the underlying stock.  That still gives me a $225.47 profit in four months on $9750.  That’s a 2.3% gain, nearly 7% annualized.  I have to be happy with that for my worst trade of the month.

I sold two VIP June 30 (VIQFF) covered calls for $2.50.  Selling in the money covered calls ended up being a good move …

Three weeks ago, while Mohawk Industries (MHK) was trading around 75.00 I placed a limit order to sell naked puts on it if it dipped and the options’ premiums increased.  Barron’s Lawrence Strauss had a bullish article on it earlier that week, but the chart didn’t seem to match the bullish fundamentals to me.  I saw potential support closer to 65 and placed my order to hit on a decent sized pull back.  That happened today as MHK dipped to its trend line of lower lows.  I’m expecting that declining trend line to be short lived as my target of 65 draws closer.

While at MHK was trading at 67.92, three minutes into today’s trading day, my order hit and I sold two MHK July 65 naked puts (MHKSM) and received $348.50 after commissions.  I didn’t price the option exactly right as MHK fell as low as 67.16 before coming off its lows.  So far, at 12:20 pm, I have the high trade of the day, but briefly after my order hit I saw the bid/ask at 1.75/2.20.  Without an order in to test anything higher than my 1.80 sale price I can’t know for sure if it would have traded higher, but I …

DRYS has come back up from its lows last week when I bought an extra June put to cover the July naked put.  Since the new June 70 put (DQRRN) only had 4 1/2 days left before expiration I bought it back today to save a little of my insurance that I was paying out to protect me from a continued decline in DRYS price.  While DRYS was trading at 76.00 I sold this DQRRN put and received $74.25 after commissions.  I’ll end up taking a loss of nearly $200 on the put option I bought, but if DRYS stays up now I’ll make almost $240 on the naked put giving me a total profit of roughly $45.

Sorry for no index chart this weekend.  I spent the weekend not doing much of anything productive, but all completely relaxing.  I watched a kids’ movie with my four year old son and was able to see my dad for Father’s Day on Saturday evening.  I hope everyone else had a good weekend and you are all ready for another exciting week leading up to options expiration Friday.  I’ll get another chart up this weekend if not before also.

Yesterday I sold three naked calls on BA @ $0.60 and by the end of the day when BA pulled back from its highs the same calls were trading at half the price as where I sold them.  After my last trade on SPY turning to a loss after I could have taken a profit, I have decided to take profits early if I can get the majority of my total planned profit very early.  With these BA calls I was expecting full profit of $167 after five and a half weeks.  With the options already way down I decided waiting another fives weeks didn’t make a lot of sense, even with the added expense of commissions on the closing trade.

I entered an order to buy the July 85 calls (BAGQ) back at 0.35 and two hours later it hit.  I paid $117.24 and took a profit of $49.76, less than a third of what I could have made, but I did it in one day, not five weeks.  Immediately I went back into my account and placed a new limit order for the same option to sell four new calls at $0.60 again.  Just …