Today was a lot more interesting than I thought it would be. My DIA December 102 call options were assigned which meant I bought 400 shares of DIA at 102 and took a full profit on that leg of the option spread. That left me short 400 shares of DIA, but with DIA December 103 calls to cover any losses if DIA moved to the upside. Sure enough DIA started higher, but retreated quickly. That took me to the DIA chart. I checked for the 1 month, 2 week, 5 day, 2 day and 1 day trend lines. They all pointed to a little more room to the downside. So I waited. DIA hugged the trend lines so I picked my ideal exit price and then added some to it to make sure I wasn’t being greedy. $102.75 looked like a common floor for DIA over the past month, but 102.85 looked even more frequently touched. I started to place an order to buy back my short DIA shares at $102.90 just to be a little above that level in case it didn’t dip that low, but decided it was low enough at $103.00 to get a decent profit.
If I didn’t have a lunch appointment today I might have waited longer, but wanted to be able to buy back my short shares and sell my long calls while there was still some time value left in them. It all went down like this today:
- I was assigned my four DIA December 102 calls which gave me a realized gain of $1,397.20 including commissions on the options.
- Due to the option assignment, I was forced to sell 400 shares of DIA at $102 and received $40,800. Interactive Brokers doesn’t charge for option assignments, which makes this trade $30 more profitable than if I was still with TD Ameritrade on top of the savings per trade.
- I bought those 400 shares back at $103.00 and paid $41,202.00 with commissions. This gave me a loss on the shares of $402.00.
- While DIA was trading at $102.94 I sold four DIA December 103 calls for $0.22 each and received $86.20 including commissions. This gave me a loss on this leg of $1,001.80.
- I’m leaving the three DIA December 102 naked puts to expire worthless which will give me a profit of $267.90.
Overall I’m leaving with a total profit of $261.30 on the series of DIA trades. That’s not much for a lot of work, but I’m happy with it considering that I made money while the Dow lost value. That makes the trades worth it.
As I was writing this post I checked back on DIA to see how it moved after I exited my positions and saw DIA had fallen below the $102.75 mark I expected it to hit. I figured this could send it down to $102.50 easily as the next typical line of support, but then saw it go as low as $102.45. It’ll be funny, not in a way that I’ll laugh about, if DIA finishes closer to $102, my original target for DIA when I entered the first legs of this option spread and I could’ve made another few hundred dollars. I picked an interesting day not to be greedy. Now I have to keep watching to make sure my DIA 102 puts don’t fall back in-the-money. If so, I’ll adjust this post instead of writing a new one just for that.
My NDAQ December 19 naked puts will expire worthless this afternoon unless something insane happens in the next 4 hours. My UCO puts still need attention before the end of the day or they’ll be assigned. I’ll update that status this afternoon or Monday if I do nothing until then on UCO.