Selling Puts

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I took another step in options trading this week by selling puts. Scenario goes like this.

Bought 200 LDK at 6.8 a while ago. Sold the May 8.0 Calls for $110 + a gain of $240 if I get called. Also sold 5 May 7.0 puts for $100. Today the shares are between 7 and 8 so I'm golden (today :-) with $210 in cash and keeping the shares. If it finishes above 8 on the call date I still pocket the $450 in profit and just lose the shares. If it's below 7 then, I keep the $110 and get 500 more shares at a good price. WIN, Win, win.

I also sold 4 NBG August 2.5 puts for $180. That's a little longer term, but I have a hard time believing that Greece won't get bailed out. NBG isn't even that leveraged, it's just an easy stock to punish. Also have an order on 10 of the May puts at .25 but doubt they'll get picked up.

I'll update this thread on my learnings just like I did for GOOG (ouch!).

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UPDATE:

1 May 8.0 LDK Call expired for a $110 gain.

5 May 7.0 LDK Puts were put (currently trading at 6.18) so $100 + -$410 leaves me down $310 on the trade for the time being.

10 May 2.5 NBG Puts expired for a gain of $250.

So, I'm about $60 down on the trades (not counting commissions), but I'm learning. Definitely only sell puts on stocks you would like to potentially own. Also be aware of volatility as the current market turbulence really pulled LDK much lower than I was thinking it would go. Finally be aware that selling puts ties up capital so you can't be spending it elsewhere (i.e. you have to be holding the funds through the entire option time horizon in case the put gets executed).

Currently I have sold a SGEN Call for June at 15, 4 NBG August 2.5 Puts, and 1 AA October 12 Put. The AA put is in the money. The rest are out.