Options Expiration – February 2020

The only option I had for today’s expiration was one QQQ February $223 naked put. It’s going to finish out of the money and give me a realized gain of $387.40. Knowing that it was safely out of the money on the final day, I sold a new QQQ naked put while prices were down.

While QQQ was trading at $231.67, I sold one QQQ April $225 naked put for $4.77 and received $476.39 after paying $0.61 in commission. I could’ve made another $0.18 or so if I timed the exact bottom a few minutes earlier at the high of the morning, but $4.77 is good still.

My premium gives me a 5.8% cushion if QQQ falls further. I have 2.18% (13.84% annualized) upside potential if QQQ stays above my strike. QQQ can fall 3.74% and I’ll make my full gain. I’m still way underinvested in this account and want to sell more puts, but days like today make me hesitate. I probably should have sold a higher strike on this new QQQ naked put since I have so much cash on the sidelines.

I almost sold more TLT naked calls this afternoon since TLT topped out just a couple of cents below its all-time high earlier today. I might make that trade next week if it looks like bonds are close to peaking after this spike higher.