Recovery Plan Using Naked Puts on Dividend Stocks

Updated: 23 December, 2019 seen 79
Dividend Stocks naked put Trading WPG XIN

In the month of November 2019, I kept suffering from my trades on indexes. I took a loss of about EUR 3,000. If there was a lesson learned, then liquidity, stop loss and too many open positions are 3 simple things to follow in the future.

Anyhow, I decided to stop trading instruments without underlying (no more futures or indexes until further notice)
The further written is copy/paste from my e-mail to a friend/ coach/ mentor (little editing added to make it blog readable)

As I had a negative balance of -3,437 EUR (not liquidity, but cash balance) - I decided to recover slowly:

  1.  stop trading indexes and futures
  2. deposit additional cash in batches (~ 500-1000/mo)
  3. sell naked puts on dividend stocks I would like to have

I have two dividend stocks which are from my league - I wouldn't say I would love them, but in the past, they have worked pretty good (dividend + options)
So the stocks are: XIN, WPG​

On WPG I've already sold January, April, and July options most probably will sell 1 or two additional positions on July
On XIN I have only Jan puts so far, looking to sell April and July puts very soon.

In the case with XIN, the stock price is $3.91, strike 5 and premium 1.25, yes these are ITM strikes, but I'm ready to take the stock, the dividend is  risky, but I'm ready to take the risk​
The ultimate goal is to get cash balance to positive by selling naked puts.

  • I deposited an additional 450 EUR today, so the balance will go up to -2987
  • Then after selling naked put on XIN, it will go up even further to ~ 2,862  
  • I will decrease negative balance by ~  - EUR 575 investing only 450

Despite I will get assigned XIN stock in April with a 95% guarantee I'm happy with that.
I hope to get under -1,000 by the end of the year. Will see.
 

Disqus