By Paul Price of Market Shadows
We rolled some puts in Market Shadows Virtual Put Writing Portfolio this morning.
We closed out our BioReference Labs (BRLI) May $30 puts while selling the same number of contracts of BRLI's November $30 puts.
In Market Shadows' Put Selling Portfolio, we had first sold three contracts of the May series for $3.60 per share ($1,080 total) back on Dec. 5, 2013. In closing today @ $2.11 per share we booked a $447 net gain on the BTC (buy to close) transaction. That $1.49 per share gain exceeded the actual stock price movement, which went only crept up from $28.32 on Dec. 5, 2013, to $28.60 at the time of the roll-out.
We still like BRLI to advance past $30, but now we have an additional six months for that to happen. Better still, we received $3.81 per share for the newly written November 22, 2014, expiration date puts, which brought in $1,143. The net result of the roll-out was a $1.70 per share credit. The old trade is now listed in our Virtual Put Selling Portfolio's closed-out transaction list. The November BRLI's can be followed on our open options positions register.
The box below shows the same closing trade executed within my personal account. My trade covered 10 contracts, rather than just three. That $1,470 gain came without ever having needed to lay out out any net cash, as the puts were not exercised prior to my buying to close.
A side benefit of rolling out options? You can ultimately make more money than if the first set merely was left alone and did, in fact, expire worthless. On my 10 contracts I could only have made $2,110 more for waiting. Now I have the potential to earn another $3,810 if BRLI rallies to above $30 and holds that level through Nov. 21, 14.
