Today I bought to close two put option contracts of U.S. Bancorp (USB) (expiration: October 16th, strike $32.50). We held the short position for 48 days and netted $168.62 on the trade with $6,500 capital exposed. Taken together, this translates to a 2.6% return on exposed capital or 19.7% on an annualized basis.
USB is up 2.84% to $37.81, as of 11:00 AM Monday morning (as I type this summary). I’d like more exposure to this rock-solid bank operator so we’ll sell more put option contracts as soon as the prices are more attractive. The picture attached to this post displays USB’s performance over the course of this trade.
I chose to pay $12 to close this position two weeks prior to expiration because this past Friday we assumed short positions in put contracts of five different companies and I’d like more unassigned cash in our account. Volatility continues to be heightened due to the pandemic and the political climate, we may need to deploy more capital to roll up our covered-call positions.
Captured from Marketwatch.com, October 5, 2020, 11:10 AM