Sold FCX, CMI and DRYS Naked Puts, again

After my Freeport McMoran (FCX) July 105 naked put expired last week and assigned me 100 shares I sold those 100 shares when FCX rallied.  The next day FCX dropped $8+.  I thought my limit was going to hit for the September 95 naked puts, but I priced it too high.  This morning I changed my order for a lower strike.  While FCX was trading near $98.00 my order hit and I sold one FCX September 85 naked put (FCXUQ) and received $329.25 after commissions. 

I thought that I should reduce my risk by selling a lower strike and the premiums met my trading model for projected returns.  I’m glad I lowered my strike because FCX is down another $3.50 from when I traded on it two and half hours ago.  Recharting it now, I can see why I lowered my strike, but can clearly see that I should’ve placed my limit higher.

My Cummings Inc (CMI) naked put expired worthless last week and I have been waiting for a new entry point to show.  I waited too long and only saw CMI climb higher for the past few days.  I priced my new limit order to hit somewhere close to when CMI dropped back to its 10 day moving average.  While CMI was trading at 68.09 I sold two CMI September 60 naked puts (CDMUL) and received $488.50 after commissions. 

CMI continued its decline this morning and even fell below 66 briefly before inching back up by lunch time.  Firmer longer term support for CMI is around $60 with the 100 day moving average climbing higher, so I think I’ll be safe on this one and might have to consider selling more puts if/when CMI actually proves $60 is a low.  Then again, the 20 day moving average held support today, so far.  Maybe I timed it better than I’m starting to second guess myself.

My DryShips (DRYS) naked puts expired worthless last week.  I’ve been watching the trend lines to try to find my new entry point.  While DRYS was trading at $75.21 I sold two DRYS September 65 naked puts (DQRUM) and received $788.50 after commissions.  DRYS has been bouncing around its 10, 20, 50 and 100 day moving averages for the past month ever since it fell below the 200 day moving average.  The 200 day moving average seems to be a ceiling that DRYS cannot close above more than one day in a row, if it even does get across it.  What I see that I like is the rising trend line of higher lows that started in January and then held support again in March and again earlier in July.  Take out the extreme (only one deeply down day without repeated confirmation) and you’ll see DRYS is dead on that line.  I’m expecting that line to hold and if it doesn’t, not drop more than a few dollars past it and thereby keeping my September 65 puts out of the money through expiration.

I’ve taken in just over $2900 in premiums this week.  Now I have to wait to see if the melting away of time value (Theta) will work for me as I’ve planned.  I have some good cushions to the downside, but positions like CHK and NVDA are eating up my paper profits before I can have another few solid fully profitable months in a row, like in the good old days of last year.