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Strategies & Market Trends : Learn Options on Futures
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To: John F. Summa who wrote ()6/12/2000 2:06:00 PM
From: John F. Summa   of 15
 
July 87.50 Coffee Puts Trade Update

On June 8, 2000, we bought to close (for $75 per contract) one-half of the outstanding July 87.50 coffee puts that we initially wrote on April 5, 2000.

The contract price at the time of writing was $1.15, and the initial credit received was $431 (minus commissions and fees).

The remainder of the position expired worthless on June 9, 2000, and was thus a winner, which means traders received the full credit of $431 on one-half of the position (minus commissions and fees).

Despite the fact that we wrote puts and the market FELL over 15%, the options still expired worthless. It is nice to be wrong about the direction of the trade and still make money. This was possible because the options were overvalued and out of the money when they were written (sold).
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