Happy weekend! After the great week for profits last week, this week's volatility definitely brought about some challenges for existing positions, which I'll share in the CLX trade below.
$60 profit in Medtronic (MDT)
Rolling a deep in-the-money position in Clorox (CLX)
$60 profit in MDT
Let's start with the good news. Towards the end of August I opened a trade in MDT, selling the $77.50 put expiring Oct for $115 in credit. 3 weeks later, the trade hit my profit target and I paid $55 to close the position, which means I locked in $60, or about 52% of max profit.
I haven't traded MDT all that much, but so far that's 2 for 2 trades in 2023, with a total realised profit of $98 - not too shabby. You can read about my earlier trade in MDT which brought in $38 in realised profits earlier this year at the link below.
Rolling a deep in-the-money position in CLX
A while ago I sold the $145 cash-secured put in CLX, expiring on Oct 20 for a premium of $117. Unfortunately that trade has continued to go the other way, and on Friday, CLX closed at $132.66 - meaning that this trade was more than $12 in the money (ITM). When a position is this deep ITM, the chances of being assigned early go up significantly. In light of that I decided that even though it wasn't quite at my 21 days to expiration threshold, I would roll this trade early just in case. I rolled it to the Nov 17 cycle for an additional $190 in credit, bringing the total credit collected so far to $307.
From here, the stock could rebound, and we could still close this trade for a profit. The stock could continue to drop, going further ITM, and I could eventually get assigned. The good news is no matter what the outcome, there's a planned next step for that and nothing is left to chance - I just need to stay disciplined and follow the strategy. As much as I would like it to be the case, not all trades are quick winners - some take a long time to come in. We saw this earlier in the year with the JNJ trade that went ITM, was rolled, got assigned early and eventually closed by selling covered strangles against it for a total realised profit of $914. Will that happen to this position? Hopefully without the assignment portion. I'll continue to update you regardless.
Closing thoughts & useful links
Volatility is beginning to show up again, which is good for new trades and not so good for existing trades, as shown in the CLX position above.
Regardless, market movements are not something within my control, all I can do is follow the strategy to deal with it as best I can.
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This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.