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.

This entry was posted on Wednesday, July 25th, 2012 at 12:27 pm and is filed under Option Trading, Stock Trading, Technical Analysis, Videos. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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