Sold QQQ September Naked Put

I delayed replacing my expired MSFT position from May and then I blinked and we’re at the end of July all of the sudden. Yesterday afternoon, I entered a limit order for a new QQQ naked put and wasn’t sure I wanted to add another 100 shares on top of the 100 I already have, so I set my ask price about $0.45 above the ask price at the time. I figured if my order hit, at least it would be on a dip in QQQ and I’d make a little extra instead of rushing into chasing an order.

While QQQ was trading at $193.16 at the open, my order hit and I sold one QQQ September $192 naked put for $3.85 and received $384.27 after paying $0.73 in commission. The trade hit after QQQ dropped roughly $1.50 from its closing price yesterday. My option shot up to a high of the day of $3.86, only a penny more than my trade. These are the trades I love to make. 

QQQ fell another $0.16 over the next four minutes and then began its ascent again. While I’m writing this in the mid-afternoon, QQQ is back up to $194.26, over a dollar better than when my trade hit. I didn’t actually think QQQ would fall that much at the open. Yesterday, it found support at its 10-day moving average and I thought it might retest that later in the week. While QQQ moved above this moving average, it did offer the intraday break which is a bit of a yellow flag for those of us who pay attention to the charts. The 20-day moving average is at $192.67 and climbing. I expect it to offer further support if QQQ takes another step lower. Below the 20-day, the 50-day moving average doesn’t come into play until $186.15.

Before QQQ reaches lower lows, it will have to break below its trend line of higher lows that began in mid-June. I’ll be watching this line for insight, but won’t panic when (not if) it breaks support.

If my new QQQ naked put is not assigned, I’ll have a 2.04% gain, 13.62% annualized. QQQ can fall 2.59% before I take a loss and that’s from this morning’s price when my order hit. I have a 3.22% cushion from its current price this afternoon. The 100 QQQ shares I have in my account already have an August $187 covered call that looks like it’s on track to be assigned in two and a half weeks. Knowing that I had this covered call more than $7 in the money helped me get over the hump of not trading for so long. Now I have to start thinking of a replacement for those 100 shares if we don’t get a bigger price drop soon.