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Archive for September 20th, 2012

Update – INTC

Posted by mounddweller on September 20, 2012

Fellow Traders,

I decided to roll-out my 5 INTC SEP $24 puts today to avoid assignment.  I looked at a couple different options (ha ha).

First I considered rolling out to DEC and down to the $23 strike price.  At the time the net credit was listed as $0.19.  That was a bit less than I was willing to take so I put in an order for $0.22 or better.  The primary benefit I saw in this trade was being able to lower my strike price while securing a net credit.  The downside was I had to go out to DEC to achieve it.

The other option I considered was the OCT $24 put where the net credit was listed as $0.22.  With this choice I got about the same amount of money but in about one-third the amount of time.

With these two choices in mind I looked at the following chart:

After looking at this chart which option would you pick?  I was leaning heavily toward the first one which I felt would leave me with a very good chance of avoiding assignment.  I felt sure with the decrease in the strike price I would have an opportunity to buy back the put on a rally in INTC or have it expire worthless.

However, the second option finally won out.  I decided that after having already sold two rounds of puts at the $24 strike I could sell one more with an OCT expiration and if INTC is below $24 at expiration I could accept having INTC put to me and position myself to receive the $0.225 dividend in early November.

So, here’s the trade I made.  I put in a trade to BTC 5 INTC SEP $24 and STO 5 INTC OCT $24 puts at $0.24 net credit or better.  It was filled late in the trading day.

Regards,

Troy

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