Buying to Close 10/7 $270 QQQ Puts for $0.14 Realized gain of $1.50 Realized cash return of 0.58% With the market rally of the last two days, I had the opportunity to close my puts for a nice gain. Making 0.58% in a week on my otherwise idle cash is pretty amazing - and combined with rolling the prior puts, I made just over 1.0% in just over 4 weeks. Selling cash-secured puts can be a great way to generate return in a rallying or flat market. But if the market drops, especially quickly, these puts can become horrible trades. The market could easily drop back down quickly, so I'll move back to cash and wait for the next opportunity.
Buy to Close 9/30 QQQ $270 puts for $0.96 Sell to Open 10/7 QQQ $260 puts for $1.64 Net (new) proceeds: $0.68 Total Net Proceeds: $2.88 Total Net Return if expire worthless: 1.1% I initiated this position by selling $270 QQQ puts for $2.20. Closing the position means I made $1.24 - which is a 0.45% return in a month. Not too shabby for idle cash in a down market... But I'll roll my gains another week by collecting an additional $0.68 per contract and reducing my cash-at-risk by ~4%. I'm not sure the best way to account for this kind of transaction - the two legs are very linked, but also could be thought of as separate transactions. For now, I'll show both ways...