Our Green Apple.
On April 4, AAPL had moved down more than 10 dollars from it’s high just two days earlier. After being out of this symbol for a couple of months, I decided to get back in. I sold the 530 put for $5. Apple continued to move down over the next few days, and on April 8 I sold the 520 put for $5. Three days later, on expiration Friday, I rolled the 520 for one week collecting $5 and rolled the 530 for 2 weeks, collecting $9. At this point, for these two contracts and the subsequent rolls, I had taken in $2400.
Now the patience came into play. I had to leave these two position alone and wait, but not all that long. One week later, on the 17th of April, I closed the 520 put for 50 cents. The 530 had another week to expiration, and I left it alone. One week later, on the 24th, I closed that position for 5 cents. I had opened, then managed an option position to take in $2400. It cost me $55 to get out, for a profit of $2345 in just 20 days.
Option positions don’t always work out this beautifully or this profitably, but with the proper plan, proper risk management, patience and discipline, they often do end with great results. At the present time we are out of AAPL and waiting for the next opportunity to use our simple system:
“Patiently wait for AAPL to fall at least $10 in one day. At some point that day or soon after, try to sell a put for $5. If it’s filled, wait. You may sell another, you may not. That depends on price movement and your risk tolerance. Roll it out if needed. Close it when the risk/reward is heavily stacked against you.”
Stay Optioned, My Friend.