InterOil(IOC) has been on a tear lately and finally gave me a chance a few weeks ago to get out of some underwater puts I'd been rolling for a while. That trade had been on since before this blog, so it's not part of the portfolio, but it was a very profitable trade if not a bit more risky than I maybe should have done. This time I'm going to give up some profit for a lot less risk.
- Sell to Open: 4 IOC Mar 17 2012 35.0 Put @ $0.30
This should be a quick trade. If IOC should happen to get hammered in the next two weeks and I buy at $35 I'm ok with that. There's a lot of controversy about IOC and it seems things are pretty well divided between bears who think the whole thing is a fraud and bulls who think it's a jackpot. I'm firmly in the bull's camp although I think it's going to be a volatile ride. That's why I'm able to get such good premiums on the options. $30 doesn't seem like much(and if my commissions weren't as cheap as they are, I couldn't do these trades), but with only about $400 in margin requirements per option, that's more than a 7.5% return in just two weeks. And with premiums as high as IOCs, I should be able to do this trade again and again.
The Numbers
- Cash: +$120
- Short Option: -$140
- Margin: -$1540
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