Wednesday, March 20, 2013

Recent Transaction

This morning I bought to close the put option I had sold on Coca-Cola (KO) back in late January.  Coca-Cola has had a pretty good run up along with the market since I originally sold the put option leading to the price of the put to decline.  I bought back the option for $0.25 on a per share basis which after commissions cost me a total of $32.98.  I decided to close out the put because there's still a little under 2 months left until expiration and this will free up the $3,750 that was securing the put.
I originally sold the put option for $1.45 which netted me, after all transaction costs, $137.00.  Assuming KO was trading above $37.50 on expiration this would have been a 3.65% total return which is annualized to 11.80%.  I was happy with that but with the relatively quick move up chose to close out the position.  In total I received $104.02 for the trade in option premium.  This ended up being a 2.77% return which is annualized to a 18.75% rate.  Not too shabby.  In the end I had collected 76% of the premium in 48% of the days.  That's a win in my book.

I'll gladly sell another put option on KO in the future because I'd love the chance to own some more, but it's a little too expensive for me at the moment.  Depending on how big the eventual pullback in it's price is I'll look to either purchase outright or sell another put.

I've updated my Option Summary page to reflect this change.

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