Options expiration (July) and trades: Naked puts on MSFT, MRK, T & more
This month’s options expiration was unexciting as far as my short options positions were concerned, which is a good thing. All of my short naked put options expired comfortably out-of-the-money (OTM), allowing me to book profits on the option premiums I collected when I originally sold the options (see details below).
I also adjusted an August-expiring naked put option position (see below) that was trading in-the-money (ITM). I also sold a few more naked put options and will try to update those – and other recent new short put option trades – in an upcoming post.
Options expiration results:
AT&T [[T]] – The July 27-strike put options I sold against T on 2/24/11 expired OTM for a 5-month net return of about 4.4%.*
FirstEnergy [[FE]] – The July 36-strike put options I sold against FE on 2/24/11 expired OTM for a 5-month net return of about 3.7%.*
Merck [[MRK]] – The July 35-strike put options I sold against MRK on 1/13/11 as part of a profitable “horizontal spread” roll-out of an earlier short put option position expired OTM for an 18-month net return of about 15%.*
Microsoft [[MSFT]] – The July 24-strike put options I sold against MSFT on 3/16/11 expired OTM for a 4-month net return of about 5%.*
Closed/Adjusted positions:
Eni SpA [[E]] – On 7/13/11 I rolled out and down the August 45-strike put option I sold against E on 2/22/11 by buying it back (at a profit for $2.13) and then selling a February 40-strike put option (for $2.28) for a net credit. This stock has recently been weak on fears over European – and specifically Italy’s – debt and the put option I was short was near enough to its expiration date and trading far enough ITM that I decided to reduce my risk in the position accordingly.
Nokia [[NOK]] – In a risk reduction move, on 5/23/11 I rolled out and down the July 9-strike put options I sold against NOK on 2/11/11 by buying them back (at $1.08) and selling an equal number of October 8-strike put options (at $0.70) for a small overall net credit. The stock price and company earnings projections, however, have since continued to fall, along with my patience. Although it’s a small position, it’s one I’ll probably be looking to exit before long.
* As always, the return on sales of cash secured or naked put options was conservatively calculated based on the option premium received from the sale of the options (minus commissions) against the unmargined capital set aside to pay for the possible option assignment (i.e., my being put the shares of the underlying stock).
