Options Expiration – December 30, 2011

I only had one option expire today (DIA, December 30, $121 strike) and it expired out of the money, worthless.  Just as I expected, DIA rose some, but not enough that I should’ve bought the shares instead of selling the naked put.  I made the trade at the beginning December when DIA was trading at $120.94.  At the end of the last trading day of the year DIA was trading at $121.88.  I could have sold the strike $1 higher and made some more money, but I made more than $200 more by writing the put instead of buying 100 shares of DIA so I can’t complain.

I planned to write another naked put to kick off the year and ride the market each month with options on either side, but the resistance that the Dow and S&P have both been up against recently needs to break to the higher side before I feel I should add more exposure.  I might miss out on the first couple of percent of gains, but if the markets dip again like it looks like they might be prone to, then I will have played it the right way.  I’m under invested right now, but I’ll be withdrawing nearly $25,000 next week so that I start the year with an even $100k in my IB account.  After that $25k withdrawal I’ll still be slightly less than 25% invested, but with my ultra-ETF exposure through UWM and UCO I have enough beta in my account to move me around as if I was 100%+ invested.  I’m just not at risk for going on margin if everything was assigned.  I’d like to get more aggressive in January, but would prefer at least a few percent sell-off first.

What do all of you see for 2012?  Leave a comment or shoot me an email if you prefer.  Have a happy New Year and let’s all plan to make lots of wise investment choices in 2012.  Thanks for reading My Trader’s Journal this year.  I appreciate all of the feedback and hope you’ve learned something from my ramblings.