DOCU Short-Put Position Closed
This morning, before I logged into our brokerage account, we had another put contract closed when a limit order repurchased an option contract for DocuSign (DOCU). On September 1st, we originally sold a put on DOCU with a strike price of $180 that expires on October 16th for $500; our limit order repurchased the option for $100.
After commissions, but before taxes, we netted $399.25 for this DOCU option. The $180 strike price required $18,000 be reserved to cover the DOCU short-put exposure. Our return was 2.2% of our $18,000; 30% on an annualized basis – over the 27 days we held the position.
As I write this summary, DOCU is trading at $213.47, 18.6% above our $180 strike price. The last trade of our Oct. 16 option was $87, $13 less than we paid to close and roughly 3% of our take.
DocuSign has been remarkably volatile since we’ve held this position, especially during the first couple weeks of our exposure to the put. When I initiated the trade to sell the put option, DOCU traded at $254.51; our strike price was 29% below the market. By September 4th, DOCU closed around $216 and shares have not since traded above $220. We effectively sold exposure to the downside on the day of DOCU’s all-time highest closing price.
Both Charts are from MarketWatch.com; accessed around 11:50 AM, ET, on September 28, 2020.