Yesterday, we talked about the Apple and WalMart positions. Today, we have resolution of those two positions.
The three short WMT 76 puts will be allowed to expire so that we will keep the entire $72 that we took in when they were sold. As I write this, there is one half hour left to the market close. WalMart is trading around 77.40 so we are nowhere near the $76 strike price. Yes, we could buy them back now for a penny or two and remove all risk. There is nothing wrong with taking that path and many traders would have rules in place that require the closing of the position. We are sitting on plenty of cash, so the tiny risk of assignment (if the market would collapse in the next 30 minutes) is not a bother to us. We’ll plan to keep it all!
Apple is little bit different. The stock is flat for the day, but the higher volatility of AAPL options gives the $102 call a little value even though we are $2 away from the strike with 30 minutes left. Something COULD happen – but probably won’t. As I started this paragraph, the price was 10 cents. I took a look at something else for a few minutes, then returned to writing. We did have an order to close those options by purchasing them for 5 cents, and it has now filled. That short position is off the table for a profit.
Looking at our P&L year to date – It now shows Apple’s profit at $9908 (with six short put contracts at 102). It is decaying at about $30 a day. We will watch for opportunities to take this risk off the table next week.
WalMart does not have an open position at this time. We were “in and out” this week and as the short puts expire, we will end the week with profits of about $1130 on WMT for this year. This trade has had it’s ups and downs during my hiatus from DeepPocketOptions. In late June the entire profit for the year was all the way down to $45. Then, as WMT took a dive and went from 77.5 down to under 73, we watched our loss grow to -$900. That only lasted about a week and our position quickly recovered.
We’ll talk more about how you get through those occasions so that you can return a position to profitability as soon as possible. We have been “in and out” each week for 3 weeks now, so the WMT trade is really working about as good as it possibly could. When that happens, we expect it to continue. For how long? We have no way to know that, but it should be obvious when things are not working any more. The difficult part at that point is convincing your brain to change course.
Stay Optioned, My Friend!