On 1/2/09 I naked short a call of QID @ 63 for $1.00 premium. The option expired out of the money at 1/16/09. I therefore made a profit on the premium of $100-commission. Note though 1/19/09 the stock value was above $63. If the previous trading day the stock closed above $63 instead of 1/19/09 my call option would have been in the money. I would have then short 100 shares of QID @ $63 each. I got lucky.
I probably would have made even more of a premium if I had sold the call on 1/1/09 before the big fall on the second. Although I had a clear trend that the stock was going down on the 2nd. Contrary to the trend the stock went up for most of the next two weeks. Fortunately there was not enough of an upward momentum to push the stock back over my call price by expiration. ETFs are very dangerous if kept to long and soon I will learn it the hard way. This has a happy ending but where there is a winner there is also a loser. I lost big on another ETF and paid dearly for it. That trade is for another day :(
On 1/6/09 I made another naked short call. This time I aimed specifically on a financial stock, ACAS. As of 2/26/09 the closed stock price is at $1.38. I wished I put a lot more money shorting this. Dang it!
In any case I made naked short call at 7.5 with a premium of $0.70. Graph below shows when I purchased it. The graph illustrates the collapse of the stock all the way to expiration date.
For ACAS was a perfect short after doubling in four days in my opinion. Again I profited on the entire premium minus commission. On the 6th I recalled there was a lot of optimism from President Obama believers that the economy was stabilizing. I gambled that we weren't by shorting at the peak. Rather then directly purchasing a put I went with a naked call because of the high premium. I would only lose if the stock value went above $8.30 by expiration date. On the monthly chart of ACAS is the deterioration of and destruction. Worried that a significant upswing would continue was in the back of my mind. Therefore I ignored the stock after this successful trade.
Talk about losing faith in a company. The char looks so familiar to Lehman Brothers and Bear Stearns of 2008. Respectively symbols of the companies are LEH and BCS and are long gone.
I will update next post with my gains/loss of 2009 on an Excel spreadsheet.
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