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
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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