07/17/2013

Closing Out A Winner

Closing Out A Winner

By Paul Price

Market Shadows locked in a profit today by 'buying to close' our Aug. 2013, $45 strike price, short put on Life Time Fitness (LTM) in our Virtual Put Selling Portfolio. We paid 15-cents a share to close out the trade one month ahead of its August 17 expiration date.

We had sold this put for $5.60 per share on Feb. 20, 2013, when LTM shares were selling for a depressed $39.40. Closing was probably unnecessary but is good insurance against an unexpected market pullback or negative company-specific news.

We earned 97% of the maximum profit potential while eliminating any chance of a reversal of fortune.

                       LTM put close out

 

 

 

 

 

At the time of the put sale, the $45 strike was in-the-money and looked aggressive. Today, with LTM trading for $54.40 it appears we were too conservative.

 LTM 1-yr. chart

We purchased Life Time Fitness shares outright in our Virtual Value Portfolio on Feb. 18, 2013 at $42.26. We are still long LTM shares but may take profits on the stock soon as well.

See details of all open and closed-out transactions in both virtual portfolios here.

 

Jul 17, 2013 12:00:00 AM | Options, Value Investing

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I'm editor at Phil's Stock World, and editor for Stock World Weekly. My background is in the biological sciences, and law. After a brief career in the legal field, I changed directions and am now working as an editor, and very much enjoying my experiences in the editing world.

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