Note: This is a Naked Put Trade!
Sold 2 SUCTC (August $55 Puts) naked puts for $2.80 to rake in about $550 – roughly a 5% return in 30 days. I previously sold naked puts on SSO for July $65 strikes a few weeks ago. The plan here is to double dollar cost average my way down without putting up cash to do so. Here’s a little diagram of what I expect to happen:
- Bought 200 SSO @ $66.30
- Sold 2 SSOGO ($67 strikes July Calls) for $2.00
- Sold 2 SSOSM ($65 July Puts) for $1.65
- Sold 2 SUCTC ($55 August Puts) for $2.80
So what’s likely to happen. If the market stays where it’s at through July expiry then my SSOGO calls will expire worthless – good. My SSOSM July $65 puts will be assigned – good; I’ll own 400 SSO at $65 which I will sell Sep 08, $67 Calls for $1.25 – good; My SUCTC options would expire worthless and I keep the premium – good. If the market raises from here then all my shares and options will be worth so much more!
If the market continues to drop then I’ll start the cycle all over again at a lower dollar cost averaged point. While everyone is whining about the market, I’ve raked in over $1200 in cash in a few weeks. Not bad at all.
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