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Friday, January 9, 2015

Spiders (SPY) January Put Options

12/10/2014 (11:22:08 am, PT) LL

sell (to open) 10 January 2015 $190 puts at $1.10

Why did I place this trade?
  • SPY was touching the 50 EMA (possible support) [see chart]
  • stochastics was near the oversold region [see chart]
  • probability of success:  83%

1/9/2015 (6:30:03 am, PT) 

buy (to close) all 10 puts at $0.03

TOTAL NET GAIN:  $1054.98               Success!

The lesson.....

On 12/10/2014 (when I sold my puts at $1.10), SPY was trading between $202.93 and $205.98.
On 1/9/2015 (when I bought back my puts at $0.03), SPY was trading between $203.51 and $206.42.
If, during the same time frame, I had bought 1000 shares of SPY instead of selling put options, I would have broken even.  However, by selling 10 put options, I came out with a profit of $1054.98!  That's why I love to sell put options!

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