a PUT STO experience today

Paul is going to cringe at this ticker, but I sold weekly PUTs on CLF this morning.  Strike of $37.50 and premium of $.38.  Underlying was at $38.74 at the time of the transaction.  With about a penny per share commission and only 2 days until expiration, my APR is 185% (and that’s selling at the third out-of-the-money strike!).  If the stock falls from $38.74 to about $37.15 in two days, I break even, and if the stock is put to me, I can of course begin selling CALLs.

BIG CAUTION:  CLF’s price is very volatile, and the ride can be like a roller coaster.  But both the PUT and CALL premiums tend to be rather substantial.


P.S.  I really consider my APR to be “only” about 74% on this trade (rather than 185%).  Why?  Because I usually do the calculation based on an ending (expiration) date of Monday instead of Friday.  For a trade made today (Wednesday), that gives a 5 day commitment instead of 2, and dividing by 5 instead of 2 makes a huge difference in the APR.  My thinking is that, if my money is tied up until market close on Friday, for all practical purposes it’s really tied up until Monday morning.