Earlier this week, I placed a limit order which went through today. The trade:
Sold 1 CSX Put Jan 15 '16 $30 Put @ 1.55 ($11.20 commission + $0.01 SEC fee)
Days Held (sell date to expiry): 296
Net Premium: $143.79
Annualized Return = ($143.79 / ($3,000 - $143.79)) * 365/296 = 6.2%
I don't mind the "low" return because I feel the risk I'm taking is also low.
The most likely outcomes of this trade are:
- Shares are trading above $30 at expiration. I will get to keep $143.79 in net premiums.
- CSX is trading below $30 at or before expiration and shares are assigned. I will receive 100 shares of CSX at a net cost of $28.56/share.