On the day a new president is sworn in and a new government takes power, our put option contract on the government software as a service provider was purchased to close. NIC Inc (EGOV) was a recommendation from one of the newsletters I follow so I sold two put option contracts on 18DEC2020 with a strike price ($25) just five percent below that day’s market price with 9-10 weeks to expiration (19FEB2021).
EGOV shares have performed well since mid-December, up ten percent, and our option contracts were closed on our standing limit order for $20 each. With five weeks to expiration, the market has granted us 80% of the premium for which we sold each contract, and there is not much to gain by holding the position. When I checked the market for these contracts earlier today, my limit order to buy two contracts at $20 were alone in their position as the highest offer to buy. Closing this position netted $157.25 or 3.1% of the collateral and 34.8% on an annual basis.