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Thursday, September 18, 2014

SPDR Industrials (XLI) Put Options

sell (to open) 1 August 2014 $54 put at $0.92
probability of success:  50% (I usually prefer a higher probability)

The lesson:
sell to open put options when the underlying is "oversold" (see chart)

Ooops!!!!  XLI dipped all the way down to its 200 EMA.  (see chart)
My August short put is ITM.  Now what??

8/12/2014 (roll)
XLI is heading back up (see chart).
Roll my August $54 put to September for a new credit of $0.41.
buy (to close) 1 August 2014 $54 put at $1.67
sell (to open) 1 September 2014 $54 put at $2.08

buy (to close) September put at $0.05 (see chart)


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