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Friday, March 27, 2015

Gold ETF (GLD) Put Options

2/17/2015 (10:03:07 am, PT)

sold (to open) 2 March 13 2015  $114 puts at $1.35 (credit)


Reasons for placing this trade:
  • 63% probability of success
  • oversold region of stochastics (see chart)
  • I selected a "weekly" option so it could expire (hopefully) before the FOMC meeting on 3/18/2015


3/10/2015 (9:40:47 am, PT)

GLD was trading around $111, so my puts were in-the-money. (see chart)
With only 4 days left until expiration, I decided to ROLL my puts to April 2015 to avoid assignment.

Here's the roll:
  • buy (to close) 2 March 13 2015  $114 puts at $2.75
  • sell (to open) 2 April 2015 $114 puts at $3.97
net credit:  $1.22

If I had simply closed my ITM short puts on 3/10, it would have cost me $2.75.
Since my initial credit was $1.35, buying (to close) at $2.75 would have resulted in a loss of $280.
I don't like to lose money, so I ROLLED my puts to April and received another credit of $1.22.


3/27/2015 (11:29:57 am, PT)

buy (to close) both puts at $1.03 (debit)

GLD was back up to $115, so my April puts were finally out-of-the-money again.
I decided to buy (to close) my puts and TAKE MY PROFITS in case GLD dropped again.

On 3/27, GLD was in the overbought region of the stochastics and reversing back down from the 50 EMA (see chart).

TOTAL NET PROFIT:  $295.77


Success!




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