Wednesday, June 15, 2016

Option Trades

     This month I did a few option trades.   When you sell options you collect a premium upfront for be obligated to BUY ( selling a put option) the stock if the stock trades below the strike price or to SELL (selling a call option ) the stock if the stock trades above the strike price on or before expiration.
      This month I put in a order to SELL a put option in TD.TO with a Jun 30, 2016 expiration  and a $56.00 strike price.  At least, I thought it was selling a put option.  Looking at my brokerage account on the weekend, I realized that I bought a put option for a premium of $31.00 without commissions.  That means the value of the stock has to drop in order for the price of the option to trade higher.  So, make sure you do not rush when putting in orders as it could be a lot worse result than this.  So decided to put in a sell order for try to reduce the loss.  My fill price was $0.47 per contract, or
$36.05 after commissions.  I recorded a loss of $5.90 for this trade.
       After completing the trade in TD, as decribed above, I sold a put option in TD for June 30 2016 expiration at a strike price of $56.00.  I collected a premium upfront of $37.05 after commissions.  This stock is showing strength as of late.  I have owned this stock in the past and it is one the the Canadian Banks, so the company is rock solid.

Disclosure:  Long TD

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

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