Edamo, Regarding the Dell puts you sold:
I believe you said the strike price was $60, expiry is Jan 01, the price of Dell was 41.5 when you sold, and your puts fetched a price of $26.
As you pointed out, implied volatility was very high at the time you sold, which gave you a very good price -- $26. I wonder though whether you realize just how good a price this was. I, quite frankly, am slightly amazed at it.
Let me show you a few calculations. When you sold your puts, Dell was trading at 69% of the strike price(41.5/60). The price of $26 you obtained for your puts was 43% of the strike price. Now, how easy is it to find puts with your characteristics that are similarly richly priced? Answer: not easy.
Here are calculations I did on 4 stocks usually considered to be highly volatile. The stocks are DELL, QCOM, SUNW and AOL. I looked at the current prices for two year put leaps on these stocks, and then compared their prices to the puts you sold. In each case the strike price I selected was the one closest to a 44.58% premium to the price of the stock. This is required because your strike price, $60, was 44.58% higher than the price of Dell (60/41.5).
Here are the results for the 4 put options. In each row the first number is the current price of the parent stock, the second is the strike price, the third is the price of a 2-year put option, and fourth is the price of the option expressed as a percent of the strike price.
DELL $38, $55, $20, 33%
QCOM $135, $195, $80, 41%
SUNW $77, $111, $41, 37%
AOL $56, $81, $31, 38%
As you can see, even the most expensive of these options, QCOM, is cheaper than yours was. QCOM put buyers only pay 41% of the strike price, whereas your buyers paid 43% for your puts. Of course, that was a very volatile period last Feb., but are markets not also quite volatile today?
I guess my question would be how were you able to obtain such a good price?
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