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Thursday, June 5, 2014

Russell 2000 ETF (IWM) Put Options

3/26/2014

sold (to open) 1 April 2014  $114 put for $1.66 (credit)
(cash received = $166)


4/15/2014

rolled April 2014  $114 put to June 2014  $114 put for $1.97 (new credit)
(cash received = $197)

 
6/5/2014

bought (to close) June 2014  $114 put for $1.28 (debit)
(cash spent = $128)


TOTAL NET PROFIT:  $210.85


NOTES:
On 3/26/2014, IWM was trading between $114.65 and $117.68.  
Let's suppose you had bought 100 shares of IWM at $116.16 (average price) instead of selling a put option like I did.

On 6/5/2014, when I closed my PUT OPTION for a PROFIT, IWM was trading between $112.09 and $114.88.  If you had sold your IWM shares on 6/5, you would have locked in a LOSS of $128 - $407, depending on what price you actually received.

This is a perfect example of why SELLING PUT OPTIONS is BETTER than just buying (long) a stock (or ETF).  When you SELL PUT OPTIONS, you're selling "time," so you will make money even if the stock/ETF goes down.

Check out my FREE lessons on YouTube (www.youtube.com/user/moneyandlilia) and learn to SELL PUT OPTIONS!

It's easy, fun and most importantly, PROFITABLE!