I’m very happy I was busy at work this morning. FNM spiked up and then came back. I might have pissed myself had I seen that it went all the way up to 34.59 for a minute. I started watching it while it was declining. Around 10:15 I entered my final order that ended up hitting three minutes later to sell new naked puts on FNM. While FNM was trading at $31.47, I sold two new April 31 naked puts (FNMPQ) and received $558.49 after commissions.
This covers me a little better for the four naked calls I have remaining. My profit range shifts some now. I can take a profit at expiration in April if FNM stays between 24.54 and 30.45. I have four calls and four puts now. I don’t plan on taking any assignments with this play and will only trade options on it. I have a huge paper loss on the calls right now, but $200 of that is extrensic value (time value). The calendar will help me as each day decreases the time value and hopefully doesn’t lift the underlying stock’s price.
I can’t say I wasn’t warned about this one in comments by Mule a few times, but now I’m clearly scrambling and agree that I should’ve hedged this one better, maybe by buying calls further OTM. I was bearish on it enough not to sell puts earlier, but now believe there could be a floor in place, even if it’s in the low 20s vs the low 30s price it’s trading at now.
VIP is down again today after recovering some yesterday. My limit just hit for two new naked puts. With VIP near 30.17, I sold two April 30 naked puts (VIQPF) and received $369.50 after commissions. I haven’t even calculated what my profit range on this is now. I have 2 April 30 and 2 April 35 puts and 3 April 40 calls. I would consider taking the option assignment on VIP and writing calls on it.
Thanks to a comment yesterday from Options-Strategery, we are reminded that Friday is Good Friday and the markets will be closed. Only one more full day of trading March options.
Yea, a Bear Call Spread for upside insurance would have helped here — see link for good description. I like Naked Calls better on ETF’s. Some of these Barron’s idea’s seem to be backfiring (FNM, POT?) — do you get the WSJ? Well worth the price.
Yep, Barron’s has been hurting me. Not all their fautlt. I did my reviews too and judged wrong. I used to subscribe to WSJ online, but canceled it when I started my new job where I actually have to work most of the day. My puts are still OTM on POT, so I’m begging April expiration to hurry up.
I think VIP might have been a Cramer call months ago, so that’s fairly typical to see it down.
Barrons is great for ideas but as with everything else, you can’t blindly follow it. Did you do any position rejiggering with the commodity crash today? As I remember, you had MON and POT for April. (It’s hard because the current portfolio isn’t up to date. *cough*)
Yes, I still have POT April 135 and MON April 100 puts. MON went $1 ITM, but POT is still OTM.
I’ll update my portfolio after options expiration, probably Monday. 🙂