In an earlier post on investing on news, I had sold puts on JRCC.
Well JRCC was up sharply in the past few trading sessions. I closed out my position by buying back my naked puts and netted a 38% profit (sold the puts for 1.95 and bought them back for 1.20).
There’s a chance the stock might go higher. But, I bought puts because it was a speculative trade and the idea was to make a quick (or somewhat short-term) buck. It went up, I made money so its time to get out.
Thats the good thing about options. They prevent you from getting married to your positions. That can be a dangerous thing if the market turns against you (speaking of which, I’m really glad I closed out my Countrywide puts after they started going against me. When I closed my puts, the stock was at $37 – now its almost $42).
Now if I could only figure out a way to make 38% returns EVERY 2 weeks!!!!!