Closed AMD PUT Option/LEAPS Position – 15% Return

Shorted AMD with PUT option/LEAPS 15% return
I recently closed off a few AMD PUT option contracts/LEAPS. These were AMD PUTS for January 2014 at a strike price of $4.00. I purchased these when AMD’s share was trading around $6.75 (contract price was $0.53) and sold the contracts when AMD’s share price hit $4.26 (contract price was $0.91). See above MetaStock chart.

Now, using option contracts of course I made profit on the spread of those PUTS. So let’s do some math here per contract $0.91 – $0.53 = $0.38 X 100 (1 contract reflex 100 shares) = $38 per contract.

So, if you bought 3 contracts that is a $114 profit minus commission. If you bought more contracts than you just multiply the number of PUT contracts you have by $38. For me, after all commissions the return was roughly 15%. Not super, but sure beats bond or money market fund returns in today’s economic environment.

by Das Brain.

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