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Friday, October 19, 2012

Priceline Oct. 2012 565/550 Put Spread (OPTIONS)


sell to open 13 Oct. 2012 $565 put options  (8.90% prob. exp. ITM)
buy to open 13 Oct. 2012 $550 put options   (5.61% prob. exp. ITM)

credit:  $0.75

10/18/2012 (options expire on 10/19)

close entire spread at $0.38  (PCLN was dropping, so the risk of expiring ITM was high)

Net gain:  $421.02


PCLN closed at $560.50 on 10/19, expiration Friday.  I would have lost $4905 if I had not closed the entire position yesterday!

This is a fine example of risk management!!


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