Options trades: Naked puts in RIG & BSBR
This past week I took profits in a couple of existing short put option positions – one in a Brazilian bank and the other an oil driller – as their remaining option premium had dropped to almost nothing (see below).
I’m still short some later-dated naked put options in the oil driller – a major player in the Gulf oil spill disaster – but will consider selling new naked puts against it (and the bank as well) on any future weakness.
Closed/Adjusted positions:
Banco Santander (Brasil) S.A. [[BSBR]] – BSBR has had its ups and down since I sold some September 10-strike put options against it on 2/4/10 for $0.80, but the $10 level has proved to be good support. In the meantime, time decay and the stock’s recent bounce from those levels has left those options virtually worthless, so I bought them back (at $0.05) for a 5-1/2-month net return of about 7.4%. *
Transocean Ltd [[RIG]] – Although RIG has basically gone nowhere since I sold August 30-strike put options against it for $1.75 on 6/8/10, declining time value and volatility have reduced the option premium to almost nothing, allowing me to buy back the put options at $0.04 for a 2-month net return of over 5%. *
* As always, the return on sales of cash secured or naked put options was calculated based on the premium received from the sale of the options (minus commissions) against the unmargined capital set aside to pay for their possible assignment (i.e., my being put the shares of the stock).
