Trade Placed: April 2009

On today's afternoon dip, I got filled on the April 91 puts at .16 (the 90 puts I wanted to sell just didn't bring in enough premium). I feel comfortable on the way the market sold off then rallied to a positive close. I think that at least for the short term, the market wants to go higher. The margin requirement on this trade is higher than I normally like, but the trade off is that there is only 22 days left in the life of the option until expiry.

Index level: 120.80
Sell to open: 15 Apr 09 91 Puts
Credit received: .16
Initial Margin req.: $13,650.00
Commission: $18.75
Net credit: $221.25
Days to expiry: 22
Simple return: 1.62%
Yield: 26.89%
% to ITM: 24.67%
Probability of expiring ITM: 2.90%

Please view my disclosure on the bottom of this blog.

Trade Closed: April 2009

I closed out the April 75 puts today for .03 - I wanted to free up the margin since the trade has made 88% of its max gain in just 14 days. Since I use ThinkorSwim, I don't pay a commission to close out trades for .05 or less, so I only gave up $45. I am trying to place another 15 contract trade at the 90 strike for April for .15 (27 % otm with 23 days until expiry and a 24% yield). The Geitner TALF plan has sent the market skyrocketing, and I am not sure that the market will provide much time (if at all) to sell more April puts and receive a fair amount of premium for them.

Index level: 124.50
Buy to close: 15 Apr 09 75 Puts
Cost to close: .03
Initial Margin req.: $11,265.00
Commission: $0.00
Net debit: $45.00
Days open: 14
Simple return: 2.63%
Yield: 68.56%
% to ITM: 39.76%