It’s getting harder and harder for me to find trades I want to make. The best trades I saw today were to close a couple of my aging options that had little value left in them. I’ll try to add in more exposure soon, but don’t want to buy something just for the sake of making a trade. It needs to have a good risk/reward balance.
The first of my two trades was on QCOM. While QCOM was trading at $72.92, I bought to close one QCOM December $67.50 naked put for $0.16 and paid $17.07 including $1.07 in commission. I didn’t mess around with this trade for more than a few seconds. I could tell without using a spreadsheet or calculator that waiting for $0.16 in time value over the next 3 1/2 weeks didn’t make sense. The bid/ask was $0.15/0.16, so I just used a market order to exit easily.
While SSO was trading at $97.67, I bought to close two SSO December $80 naked puts for $0.13 each and paid $27.17 including $1.17 in commission. As with the QCOM trade, I had almost no reason to wait out making an extra quarter and a penny over the next few weeks. The bid/ask was $0.10/$0.13. I tried to get the order to hit at $0.11 and then raised it to $0.12 a few minutes later. Rather than risk the trade opportunity getting away from me, I changed the order to a market order a few minutes later and it hit at $0.13. I was going to close these options last week, but didn’t get to it, so at least I made a little more time value by procrastinating. I don’t think SSO is going to fall 18% by expiration next month, but now I don’t have to worry about it and can focus on selling another option that’ll give me a better profit.
By closing these two trades early, I beat my projected annualized gains in both of them. That’s not worth much if I don’t use the freed-up cash for something different. I might make another opening trade tomorrow, but don’t expect any big dip in prices to perk up volatility and option premiums. As long as stock prices creep higher, volatility will stay low and it’s going to be hard to find a trade I like. I might simply buy shares of SPY and include a trailing stop limit on it. If I get stopped out, I’ll switch to SSO while volatility is higher. The market is open tomorrow, but I expect volume to be light with traders leaving early for Thanksgiving. Friday is only a half day for the market and usually isn’t much to trade on. It wouldn’t be the worst thing to finish out the month with my current reduced-risk portfolio.