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New trade – Ferrellgas Partners LP (FGP) new put selling

My previous put selling trade on Ferrellgas Partners LP (see the trade here) expired worthless for full profit last Friday. I still like the stock and decided to continue selling puts against it.

As I wrote in my previous article about selling puts, you should do it only against stocks, you like to own. When I opened the previous contract I was sure for about 98% that I wanted the stock. Today I am 100% sure about this paper.

Nevertheless I opened quite a long contract today and collected $110 premium.

If this contract expires worthless I will make 5.5% or 11.02% annualized profit. If the stock drops below my strike price I will get assigned and yet keep the premium. My cost basis will be $18.9 a share. If the stock drops below my cost basis (break even price) too deep I will roll the put lower and further in time.

08/19/2013 09:41:27 Sold 1 FGP Feb 22 2014 20.0 Put @ 1.1

 





2 responses to “New trade – Ferrellgas Partners LP (FGP) new put selling”

  1. When you do this against stocks you like to own, and the options move against you, do you purchase the stock with your option?

    • Martin says:

      It depends, if I see a better opportunity rolling the put down rather than being assigned I roll it down and further in time. If there is no such opportunity available (or I would have to pay – a debit transaction in lieu of credit transaction) then yes I let the option assign a stock to me and buy the stock thru the put option.

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