I know I'm already short a couple long-dated puts on CSCO, but today I can't resist selling some more. This time I'm staying short-term.
- Sell to open: 2 CSCO Jun 03 2011 16.0 Puts at $0.07
These are weekly options that expire next week. I'm only collecting $14 upfront on this one, but there isn't much margin requirement and it's only 8 days til expiration. If CSCO remains above $16 at expiration, the options will expire and I'll close out a 2.27% gain on margin requirement in just 8 days. It doesn't sound like much, but trades like this can really add up over time. It's one of those trades that doesn't work with a lot of brokers because the commissions eat up most, if not all, of the profits.
The Numbers:
- Cash: +$14
- Short Option: -$18*
- Available Margin Equity: -$616
*The difference between the cash and option values reflects the bid/ask spread
No comments:
Post a Comment