One week ago, ADI plunged nearly $4 from the previous day’s closing price to an intraday low of $89.35. A lot was going on to cause fear in the markets in general, but it seems temporary, so I waited to react. Within a couple of days, ADI was back to where it had been the day before the sudden drop and seemed to have had a good wash out of the weaker investors. That theory didn’t hold for more than a day as ADI had another rough day to begin this week’s trading.
The past couple of days saw some improvement and when I saw my ADI naked put no longer we a loser for me, I dumped it. While ADI was trading at $92.57, I bought to close my one ADI September $95 naked put for $2.45 and paid $245.23 including $0.23 in commission. Originally, I received $249.76 for this put, so I closed it with a realized gain of $4.53. No, the decimal is not in the wrong place.
I could be upset that I didn’t even make $5 in the two months since I made the trade, but instead I’m happy I didn’t own the stock. When I sold this naked put, ADI was trading at $98.29. It was down $5.72 from the July 19 price when I made my trade today and up from the low mentioned above. Clearly, it’s much better to make $4.53 than lose $572.00.
I plan to sell another naked put on ADI, but I want to wait for the November contracts to be available. Right now, only the September, October, and December contracts are available for 2018 expiration. Since ADI is hitting resistance at its 10 and 200-day moving averages, I’m in no rush anyway.