Market Curiosity: Exploring Markets And Systems

December 27, 2010

Non-ideal sell Feb 35 PCH put (paper trade) +69%

Filed under: +51 to +75%, Short Puts — Tags: — Jeff Fitzmyers @ 6:47 pm

Action: Sell a FEB 35 PUT for about $240. EDIT: paper purchase at $245. (Bid 245, ask 300. Picking the worst price since it’s a paper trade. Likely would have been able to get $270.)
Exit: On a good spike up; a close below 31.50, get the stock put, or simply roll position.

– Daily CCI is high, but not too uncommon to be oversold for a while. Not ideal.
+ Increasing volume over December.
+ Weekly CCI crossed above monthly CCI.
+ Double normal volume a week ago.
+ Price is likely to tag the white horizontal resistance line.
+ Pretty good volume the past 2 days considering the holidays.
– No option at 32 or 33 so have to pick 30 or 35. The 30 would sell for about $35. That is the safe play. But picking the 35 strike since the weekly and monthly CCI’s are starting rather positive. Will close trade on a spike up or simply roll over.

Action: Sell a FEB 35 PUT for about $240. EDIT: paper purchase at $245. (Bid 245, ask 300. Picking the worst price since it’s a paper trade. Likely would have been able to get $270.)

Exit: On a good spike up; a close below 31.50, get the stock put, or simply roll position.

UPDATE: Jan 14th: Bought back for $1.45. PCH will likely go up some more, but I wanted to exit on a decent run up and before price has a chance to correct since the option is in the money.

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