My last QCOM naked puts expired worthless this past weekend. I waited a little more than two days to pick my new entry point. I still like the company and the stock’s 10 day moving average is just above 45 giving me a good strike to target. I also drew a trend line of higher lows starting on March 20th and hitting again on April 22nd and finally every day from May 9th through May 15th before QCOM gapped up.
I put a limit in this morning and lowered my price later as I saw QCOM moving up again and didn’t want to miss out. I should’ve been more patient and made a few extra dollars. While QCOM was trading at 47.04 one of my orders hit and I sold one July 45 naked put (AAOSI). QCOM went up to 47.13 before coming back down again. The second half of my order hit as QCOM passed through 47.04 again. I’m now short two July 45 puts and received a total of $294.49 after commissons. Within 30 minutes QCOM was back down around 46.80 and offered higer option prices before it bounced back.
For a split second I considered chasing the option as QCOM climbed, but the way TD Ameritrade handles commissions I would have paid full commissions again. With TD Ameritrade, once you place an order and part of it hits you pay full commission for the trade. If the remaining limit order hits within the same day you don’t have to pay a commission again. If it drags on to the next day before completing you have to pay full commissions.
Also, since I’m light on long positions right now, I moved another $25,000 to my money market (NPLXX). That brings me up to $75,000 in NPLXX. I keep this as cash backing for any naked puts assigned. Since most of my naked puts are not assigned I’m able to write the equivalent of twice my account’s value and still keep this cash to the side, drawing interest. A year ago I was getting around 5% from NPLXX. Now I’m only getting 2.2%. Better than nothing, but not something to brag about.