Manoj

Selling Bank of America Puts Is As Safe As It Gets

Well, its August 23, 2007. Exactly two weeks since I wrote the article above.

Bank of America stock has rallied to around $52 today morning, from the lows of around $47 around August 9th. The strategy I had suggested of Selling Jan 40 PUTs for $1.30 each has paid rewards.

Today the PUTs are trading at $0.60. Today you can buy back the 10 contracts that you sold, for a total of $600. That gives you a profit of $700 in 14 days on your cash requirement of about $6000.

I have closed out my position, by buying back the PUTs that I had sold on August 9th.

The trade has yielded a 11.7% in two weeks. This is something in between "Heads I win, Tails I don't loose". Lets say the coin fell on its edge!