The Money Tree

Safely Generating Income in Retirement

New Trade – FDO

Posted by mounddweller on March 8, 2014

Fellow Traders,
I STO  2 FDO MAR $60 puts at $0.65 right before the close on Friday.  Reasoning is as follows…
(1) Good ROI, >1% with 2 weeks to expiration.
(2) 5% downside protection
(3) Stock is very oversold, has fallen for 7 straight trading days
(4) support at $60
Likely will close position early on any bounce higher.  With only 2 weeks to expiration the premium should erode rapidly especially with a bounce.
Here’s the 1-yr price chart:
BLOG - FDO 1 yr chart

4 Responses to “New Trade – FDO”

  1. Martin said

    Looks like a good trade, although with today’s drop it’s getting a bit shaky. Will you be rolling if it drops below 60?
    Well, I like the stock and added it in my watch list for my future trades.

    • mounddweller said

      Martin, Yes, if it drops below $60 I will roll out. Depending on when this occurs would determine the specifics of my rollout. By that I mean would I buy back both open contracts or just one of the contracts? When I executed the rollout would I fewer, the same, or more contracts and at what strike price? Thanks for reading and commenting!

  2. Martin said

    Also, I have a question. How do you determine what’s your involved capital? Do you use maintenance or strike price? Thx

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