Trade Update - NAB
Hi everyone,
Finally, today the market moved NAB! It has seemed to just glide along over the last couple of weeks and not do too much since I re-entered another strangle. The only problem with this however, is that the time value has been zapped out of the options and so I decided today to take some money off the table.
This trade would have closed much quicker and with a bigger profit, had I realised when I placed it, that the stock was going ex-dividend a week after I had first placed the trade. This caused the puts that I bought to be more expensive to purchase, as well as lose a lot of value after the ex-div date! So here is the lesson, ALWAYS take a quick minute before you place a strangle, and check that the stock is not going ex dividend. You can still trade it of course, but probably just buying calls may have been a more profitable option.
Anyhoo, I closed my $22.50 put today and decided to leave the $21 open, just in case there is further downside in this move, and if not, I still have my $23 call open to take advantage of any upside there may be, this close to expiry.
Here is how the trade looks from the beginning;
Bought 1 x NAB June $21.50 Call for a cost of .745 cents = $745
Bought 1 x NAB June $21 put for a cost of .70 cents = $700
Total cost of Strangle = 1.445 or $1445.
Sold 1 x 21.50 call for a premium of $1.45 = $1450
Bought 1 x NAB June 23 call for a cost of .35 cents = $350
Bought 1 x NAB June 22.50 put for a cost of .805 = $805 (expensive as the stock was going ex-div!)
Total Cost of new strangle = $1.155 or $1155
$1450 - $1155 = $295 Profit so far.
Today Sold 1 x NAB June $22.50 put for a premium of $1.00 = $1000 - As you can see its not that much more than I paid, and that is due to the stock going ex-div 73 cents, around half of what I first paid for it has the dividend factored in…
Adding the $295 +$1000 gives me a total profit of $1295. I still have another put open and a call so if the stock makes another big move either way before expiry, I can possibly squeeze a little more $$ out of the trade!
That’s all for now, as always Happy Trading and remember…