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Strategies & Market Trends : Option Strategies
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To: sm1th who wrote (1918)2/23/2018 10:34:55 PM
From: Thehammer  Read Replies (1) of 2591
 
Thanks for the nice compliment. I am pretty much a plain vanilla type of investor. I don't trade with the possible exception of options and I consider them more of a hedge. If you are doing just the jobs you want, and don't need them, that is pretty much "retired" in my book. I have been impressed by the level of investment acumen displayed on this board and a few others. Most of you are and have been successful at business and that knowledge is invaluable in evaluating investments.

Okay, I will post an option trade that went south on me. I have been selling puts on CMI (Cummins) off and on since 2012. I think roughly 15 open and close positions. On Jan 25, I shorted 2 Mar CMI $180.00 puts for a net credit of $613.94. This was before the big drop and I think CMI was trading around $188.00.

I use a program to help keep track of my positions and an alert went off that the time value on the puts fell below $.50. I think CMI was around $168 or so. Using a spread order (you can usually do better with spreads than placing separate trades and also negate the market exposure), I bot back the 2 Mar $180.00 puts for $2458.04 and simultaneously sold 2 Sept $180 puts for $3771.87 or a net credit of $1313.83.

Based on all the other CMI put trades that I have done, I actually have protection on CMI down to $129.00 / share. When I first started writing CMI puts, the strike price used was $80.00 I'd have been better off just buying the stock, (I did buy some).
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