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Friday, November 7, 2014

QQQ Nov 2014 Put Options

10/9/2014 (11:47 am, PT) (RD)

sell (to open) 1 Nov 2014 $93 put at $1.18 (I got paid $118)

probability of success: 70%

11/7/2014 (6:30:02 am, PT)

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


The lesson:

On 10/9/2014, QQQ was touching the 50 EMA (possible support) and it's at the "bottom" of the stochastics, so it's a good time to SELL put options (see chart).

On 10/15/2014, QQQ dropped all the way down to $90.24 (see chart), so my put option was ITM.  However, I was not at risk of early assignment because there was a lot of extrinsic value remaining, so I left my option open (i.e., I didn't buy it back for a loss).

As always, I have a GTC, buy-to-close, limit order of $0.05 in place.  This order filled at the Opening Bell on Friday, 11/7/2014 (see chart).  Hallelujah!

The bottom line.....  instead of panicking on 10/15 and closing my trade at a loss, I left it alone and came out with a PROFIT!

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