My option trades

I'm placing a GTC order to sell an August $11 put on CROX.
Credit $0.20
Annualized % return just above 16%... if order filled in next day or two.
Stock needs to trade between $14.20 - $14 to pay the credit i desire.
Stock currently trading $14.40.

Tech support in the $10 - $11 area, per the 5 year chart.
Fundamentals are a mixed bag of good and so-so.
But overall, financially healthy and reasonably valued at my desired strike.
The "so-so" fundamental criteria, are mostly related to the economic siituation in Europe.
But at a potential price of $11, with a break even of $10.80,... I believe any further deterioration in Europe's economy, still gives this pending trade a reasonable cushion, and a high probability of success, to earn 16% annualized.
 
Quote from Put_Master:

I'm placing a GTC order to sell an August $11 put on CROX.
Credit $0.20
Annualized % return just above 16%... if order filled in next day or two.
Stock needs to trade between $14.20 - $14 to pay the credit i desire.
Stock currently trading $14.40.

Tech support in the $10 - $11 area, per the 5 year chart.
Fundamentals are a mixed bag of good and so-so.
But overall, financially healthy and reasonably valued at my desired strike.
The "so-so" criteria are mostly related to the economic siituation in Europe.
But at a potential price of $11, with a break even of $10.80,... I believe any further deterioration in Europe's economy, still gives this pending trade a reasonable cushion and a high probability of success.
More...

Your returns are based on the margin you have to put up? So how do you account for the margin changing?
 
Quote from newwurldmn:

Your returns are based on the margin you have to put up? So how do you account for the margin changing?
More...

I'm not basing the potential annualized % return on margin.
I'm basing on the following formula and assumptions.
Assuming the trade gets filled in the next day or two:

I'm using an "annualization factor" of "9", to represent the trade taking place over 5 and a half weeks.

First I divide 100 by my strike..... = 9.09
I then multiply the "annualization factor" of 9 times the 9.09.
I then multiply that answer times the credit of $0.20
Hence, 9.09 X 9 X 0.20 = 16.36%

The annualization factor is actually a bit higher than 9, but I'm allowing for the cost of commission.
And I don't really care if it turns out to be 17% vs 16%.
Either way I'm still earning the same DOLLAR amount of profit.

Others may have a different formula they use to calculate the annualized % return. But I like this one as I can usually do it in my head, and it's just as accurate as any other. Once you memorized the answer of "100 divided by various strikes", it takes a few seconds to calculate the rest.
 
Quote from Put_Master:

I'm not basing the potential annualized % return on margin.
I'm basing on the following formula and assumptions.
Assuming the trade gets filled in the next day or two:

I'm using an "annualization factor" of "9", to represent the trade taking place over 5 and a half weeks.

First I divide 100 by my strike..... = 9.09
I then multiply the "annualization factor" of 9 times the 9.09.
I then multiply that answer times the credit of $0.20
Hence, 9.09 X 9 X 0.20 = 16.36%

The annualization factor is actually a bit higher than 9, but I'm allowing for the cost of commission.
And I don't really care if it turns out to be 17% vs 16%.
Either way I'm still earning the same DOLLAR amount of profit.

Others may have a different formula they use to calculate the annualized % return. But I like this one as I can usually do it in my head, and it's just as accurate as any other. Once you memorized the answer of "100 divided by various strikes", it takes a few seconds to calculate the rest.
More...

makes sense. sorry i had a brain fart while reading your first post.
i kept thinking .2/11 is 1.8% and so he must be calculating using margin which could be a little over a $1 for this...

I like that trade.
 
If I want to assume the trade gets filled tommorrow, then the "annualization factor" would be 9.6, as I would divide 38 days into 365.
Thus, 9.6 X 9.09 X 0.20 credit..... = 17.45%
But either way, my dollar profit earned remains the same, regardless if it gets filled tomorrow or the next day, or the next.
CROX needs to test $14 this week, for my order to get filled.
 
so are the percentage returns are talking about referring to a cash secured put or are you talking about the percentage you're getting a return on related to the margin you're putting up?
 
The CROX order I discussed yesterday was filled this morning.
Sold puts on $11 strike for $0.20 credit, for August.
Annualized % return about 17%.
OTM safety cushion....22%

I'm basing the % return on the assumption that the stock gets put to me "at my strike",.... or as I would a cash secured put.
Formula I use is the same for 1 contract or 100.
The credit may not seem like much. But based on an $11 strike and 38 days of exposure, it's a reasonable 17% annualized return,.... particularly nice with a 22% otm safety cushion.
 
Quote from Put_Master:

The CROX order I discussed yesterday was filled this morning.
Sold puts on $11 strike for $0.20 credit, for August.
Annualized % return about 17%.
OTM safety cushion....22%

I'm basing the % return on the assumption that the stock gets put to me "at my strike",.... or as I would a cash secured put.
Formula I use is the same for 1 contract or 100.
The credit may not seem like much. But based on an $11 strike and 38 days of exposure, it's a reasonable 17% annualized return,.... particularly nice with a 22% otm safety cushion.
More...

Comms are a significant % of that credit.
 
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