sell to open 1 Nov 2014 $188 put option at $2.54
I received $254 CASH immediately!
WHY did I place this trade on 10/1/2014?
- SPY dropped 1.36% (when the underlying goes down, put prices rise)
- "bottom" of stochastics (see chart)
- probability of success: 67%
On 10/15/2014, SPY hit a low of $181.92 (see chart), so my Nov $188 put option was $6.08 in-the-money (bad). However, I was not at risk of early assignment because there was a lot of "extrinsic" value remaining in my option.
So.... I left my position open. After all, what goes down must come up, right?
11/10/2014 (7:14 am, PT)
buy to close my put option at $0.05
NET PROFIT: $241.18 SUCCESS!
By leaving my put option open, I was able to take advantage of SPY's recovery (see chart).
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