Well Puts

I had the following options expire in January. January was a good month. I don’t think I will be nearly as prosperous in February.

American Eagle Outfitters, Inc. (AEO) The Jan 15 puts expired OTM. I wrote these back on 11/25/09 for a 7 week return of 5.28% *. AEO is back below the 100 day SMA. I might consider selling some more 15 strike puts if support holds. This will come off my watch list for now.

Century Aluminum Co. (CENX) I wrote these puts in my IRA back on 11/18. They expired OTM for a 8 week return of 3.23% *. There is support at 12 and I might look to reenter this by selling March 10 or 12.50 puts.

DryShips, Inc. (DRYS) The Jan 7.50 calls I wrote back on 12/02/09 expired OTM for a 6 week return of 2.16%. I had also sold some 6 strike puts as part of this trade but I closed them out at break even. DRYS is breaking down and I won’t sell any more puts at this point.

Diana Shipping Inc. (DSX) I wrote Jan 15 puts in my IRA back on 12/1. This is a 6 week return of 5.61% *. I still hold some DSX in my Roth. My cost-basis is $11.09.

Energy Conversion Devices (ENER) The Jan 11 puts I wrote on 11/27/09 expired OTM. This was part of a trade adjustment I made to roll the Dec 12 puts to Jan 11. I also wrote Jan 11 puts in my IRA.

Hanesbrands Inc. (HBI) The Jan 22.50 puts I wrote on 12/08/09 expired OTM for a 5 week return of 2.63% *.

RTI International Metals, Inc. (RTI) The Jan 17.50 puts I wrote back on 11/24/09 expired OTM. This is a 7 week return of 4.24% *.

UAL Corporation (UAUA) The Jan 7.50 puts I wrote back on 12/01/09 expired OTM. This is a 6 week return of 6.56% *.

* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.

I had the following options expire in December.

Century Aluminum Co. (CENX). The December 7.5 puts I wrote back on November 12th expired OTM for a 5 week return of 2.67%. * I’m also short the Jan 7.50 puts. CENX exploded back on December 10th and I’m glad I could participate in part of that move. If we get some consolidation or a pullback in the next couple weeks I may look to sell the Feb 12.50 or 10 puts.

Diana Shipping Inc. (DSX) – I had both the December 12.50 puts and December 17.50 calls expiring OTM. I wrote the puts back on October 29th for a 7 week return of 4.74%. * I wrote the calls on November 19th for a 4 week return of 3.10%. * This knocks my cost-basis down to $11.09. I’m currently short the January 15 puts.

Energy Conversion Devices, Inc. (ENER) – I wrote December 14 calls back on November 6th. This is a 6 week return of 2.45%. * ENER is showing some signs of improvement. I’m short the January 11 puts.

Ultra Financials ProShares (UYG) - The December 6 calls I wrote back on November 13th expired OTM for a 6 week return of 3.49%. *

* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.

November 2009 Options Expiration summary.

I made a few trade adjustments earlier this month and rolled CENX and GMXR forward and down:

• Century Aluminum Co. (CENX)
• GMX Resources Inc. (GMXR)

I also closed out of some short options positions early to lock in a profit and eliminate any risk of assignment.

• Ultra Financials (UYG)
• McMoRan Exploration Co. (MMR)

DryShips, Inc. (DRYS) – The DRYS November 6.00 puts I wrote at the end of September expired OTM. This is a 7 week return of 7.38%. *

DRYS is forming a wedge on the hourly chart – like just about every other chart I’m seeing right now. I might take another opportunity to sell more puts this coming week. Probably the January 5 strike. I should probably write some covered calls on the small position I’m holding too. I was hoping for a breakout much like DSX but it hasn’t formulated yet.

My current cash position is at about 60%.

* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.

I had the following options expire in October 2009.

AMB Property Corp. (AMB) – I sold to open AMB October 20.00 puts back on September 8th that expired OTM. This is a five week return of 4.21%.*

CardioNet, Inc. (BEAT) – I sold to open BEAT Oct 7.50 calls on September 21st. This is a 4 week return of 5.23%.* I also bought some BEAT 7.50 calls on October 6th. BEAT is still range-bound between $6 and $8.

Diana Shipping Inc. (DSX) – I sold to open DSX October 15.00 calls back on September 16th that expired OTM. This is a 5 week return of 3.28%.* I might turn around and sell some November 15 calls right away.

Energy Conversion Devices, Inc. (ENER) I sold to open ENER October 13 puts in my taxable account on September 17th. I was put these shares at $13. When I opened this trade ENER had a flat 50 day SMA but it has since started declining. I’m leaning towards selling some November 13 calls on any further signs of weakness. ENER does have some nice volume on these recent rallies as seen on the hourly chart.

I also had some ENER October 14.00 calls expiring OTM in my IRA. I sold these back on September 21st and they expired OTM for a 4 week return of 3.90%.* This brings my cost basis down to $12.48.

United States Natural Gas (UNG) – I sold to open UNG October 12.00 calls back on September 18th and again on the 24th. These calls expired OTM for a 4 week net return of 4.12%.*

* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.

I had the following options expiring in September.

Energy Conversion Devices, Inc. (ENER) – I sold ENER September puts back on July 23rd in my taxable account. This is a 2 month net return of 7.54%.* I sold ENER October 13 puts on September 17th once I was confident the September puts would expire OTM.

I also hold ENER in my IRA and had some September 16 calls expiring which I sold on August 10th. This is a 6 week net return of 4.64%* and lowers my cost basis to $13.01.

United States Natural Gas (UNG) – I had September 14 calls expiring that I sold back on August 10th in my taxable account. This is a 6 week net return of 4.95%.* and brings my cost basis down to $11.52. I sold some UNG Oct 12 Calls in my IRA on Friday, September 17th before close.

RTI International Metals, Inc. (RTI) – I sold to open RTI Sep 17.50 puts back on August 4th. This is a 6 week net return of 6.24%.*

Smith International Inc. (SII) I sold SII September 25.00 puts back on August 13th. This is a 5 week return of 2.77%.*

Basic Energy Services, Inc. (BAS) – I sold BAS Sep 7.50 puts on July 24th. This is a 6 week net return of 15.23%*.

I closed out these September options prior to expiration:

• CardioNet, Inc. (BEAT) on 9/17
• Carpenter Technology Corp. (CRS) on 9/4
• JA Solar Holdings Co., Ltd. (JASO) on 9/16
• TBS International Limited (TBSI) on 9/9

* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.

I didn’t have a lot of options expiring in August. I bought-to-close my JASO puts back on Aug 11th for a nice profit and ZOLT on the 19th at breakeven. I only held DRYS and UNG puts through expiration.

UNG - I choose not to roll my UNG puts into Sep therefore I will be put some UNG at 13 and 14 (2 different accounts). This is the third month I’ve sold UNG puts (June and July expired OTM) so my cost-basis is thankfully much lower than the strike price.

UNG just can’t seem to find a bottom so I need to be very careful acquiring much more. The hourly chart looks terrible. There was a lot of volume on Thursday and that could have been the final shakeout of any weak longs but only time will tell. I will be watching this for a pop next week and possibly sell some Oct 11 or 12 puts.

DRYS - I sold some August 5 strike puts back on 7/9 that exipired OTM. This brings my cost-basis down to $8.73 from a starting point of $14.76. It’s always nice to be able to hold through expiration and collect the entire premium.

All the MA’s are flat so I need to wait and see where the next short-term trend is. If it can break through the 6.25 level it could get going to the upside nicely. If we breakdown and head back towards support at 5.00 I will look to sell more puts again.