yonglonglai.com

Same reason as before, my internet stuffed up yesterday and was in meetings after work yesterday till late so here is what I did yesterday. This trade was a simple one, was in ZFX last month and is still looking good, had a pull back similar to LHG and decided to enter again, selling insurance at $17 and receving similar premiums to last month.

Remember this is not meant to be a huge cashflow strategy, its safe and I do this because I have a 50% cash reserve and I might as well do something with the money instead of let it rot and earn 0% interest. This income is usually enough to service to interest of my line of equity that I use to do all my trading.

The Trade (ZFX) - Traded on 28th May 2007
Sell Jun$17 Puts @ $0.55

Expiry = 28/06/2007
Share/Contract = 1000
Max Profit = 0.55
Max Risk = 16.45 [(17.00) - (0.55)

Return on Risk = 3.34%
Breakeven = $16.45

I opened 1 contract:
Reward for trade (excluding fees) $550.0
Reward for trade (including fees) $455.38

Value At Risk $16,450.0

(somebody paid me 55c to insure their share at an agreed value of $17 for ~30 days)