Fellow Traders,
I want to update you on my naked put trades in Best Buy (BBY). You’ll recall back on December 28th I opened two positions in BBY. In one I sold 2 JAN $22.50 puts at $0.56. In the other I sold 3 MAR $20.00 puts, also at $0.56. You can read more about these trades and my rationale for making them here: http://troysmoneytree.wordpress.com/2011/12/28/new-trade-bby/.
Like most of the market, BBY has gone up in the new year. It was $23.06 when I placed my trades in late December. Today it closed at $25.36.
The JAN $22.50 puts expired OTM this past weekend. Over the past few days I had been keeping track of the premium on the MAR $20 puts. I was looking for an opportunity to ‘take my money and run’ without leaving too much on the table. That opportunity came yesterday. I was able to buy back the MAR $20 puts for $0.11. This allowed me to capture over 80% of the value in the puts in about one-third of the total time remaining prior to expiration.
Below are the results of my BBY trades:
As you can see this trade turned out nicely. With a holding period of 26 days or less I earned about 2.50% ROIC. Annualized it works out to around 35%. Wouldn’t it be nice if all my trades could work out this nicely!
Regards,
Troy
