I have to admit, I was psyched when I saw the futures were down this morning pre-market. With all of my options expiring worthless I was sitting on half of my account’s cash unspoken for and ready to buy in at lower prices. I hoped we’d get a pull back and that my Dow Jones [...]
=============
Article Content:
I have to admit, I was psyched when I saw the futures were down this morning pre-market. With all of my options expiring worthless I was sitting on half of my account’s cash unspoken for and ready to buy in at lower prices. I hoped we’d get a pull back and that my Dow Jones chart from the weekend was wrong. Instead the Dow went low enough to find support along the same trend line I drew that has worked for weeks and I missed a good entry point.
Instead of spending the day complaining about it I checked the stocks where I had options expire on Friday and decided to revisit two of them today. I started with EEM. As I’ve mentioned in the past, I’m using EEM for some international diversification and try to keep an open position in it unless I see it trading near the upper end of its trading channel. This morning it actually dipped closer to the lower end of its trading channel and I took the opportunity (although I missed the bottom) to sell new naked puts. While EEM was trading at .28 I sold two EEM May 41 naked puts for .65 each and received 9.07 after commissions. With a strike of it’s in that no man’s land that makes me always debate if I should sell two or three contracts. Two is a smaller position than I’d usually like and three is a little bigger than I typically like. I like to aim for each position to roughly equal 10% of my account. Since this is an ETF I could reason going bigger, but since I got almost 0 for the trade I decided to start with two contract and then maybe add another one on another dip if we get it.
Once EEM was a done deal I moved down the list from last week’s expiration and started working on KFT. KFT was my steady stock last month and I expect more of the same behavior coming from it over the next couple of months with a tilt higher. While KFT was trading at .67 I sold three KFT May naked puts at .20 each and received 8.61 after commissions. I rarely sell in the money (ITM) naked puts, but with KFT’s steady performance recently and its dividend yield of 3.89% I decided I wouldn’t be upset if KFT was assigned and I turned it into a long term position where I collected the dividends quarterly along with the option premiums each month or two. At the same time, if KFT can climb above in nine weeks I’ll be quite content to be left with the May premiums and no actually shares.
I was planning to open a new position on SSO today too, but after I missed the lows of the day I decided to wait to see if SSO could get above the intraday high (.18) it set last week. I don’t have an order in to trigger when that happens, but do have an alert set up to notify me so I can reconsider the trade. There’s always tomorrow.
———————