Today I BTO 1 ACI Dec09 12.50 Put in an IRA account at 2.60.  I then placed a GTC STC order for the same ACI Put at 3.30.  I’m looking for a relatively quick turn around on this one.  If this works out I will net about $52.52 for a 19.54% (not annualized) return.

I don’t normally buy Puts because I don’t like the declining time value and I am just more of an optimist. However, I have finally decided that with the market continuing to go down I should take advantage of it.  I didn’t need to look any further than my own portfolio to identify candidates.  I had lots of choices but I picked ACI today.

The story is actually a little funnier than I depict.  I first BTO 1 ACI Dec09 12.50 Put at 2.55 and placed the GTC STC order at 2.00.  One doesn’t need to be a financial wizard to realize how poor that trade was.  Actually, I made the trade early in the morning (about 6:45 am - I live in California).  I had meant to STC at 3.00 but just made a typo and since it was early I didn’t notice the error.  Luckily, the STC was executed at 2.50 and the error only cost me 22.49.  If I had entered 3.00 as I had intended I would probably have been executed today as the end of day bid was 3.00 so it may turn out that it will cost me more.

I have been working against a margin call in my taxable (and margin) account for most of the month.  In October I thought this was behind me but, as usual lately, I was wrong.  I have been using my weekly IRA redemption to increase the cash in the margin account but that wasn’t happening fast enough with the wild swings in the market.  So today the E*Trade margin department took action again.  This particular account is so demolished that I whatever they want to do is pretty much okay with me at this time.  They usually do what I would do anyway.  So…

Today I BTC 2 RIO Dec08 35 Puts at net cost of $5155.49.  That gives me a net loss of 23.47 per share.  Of course, I should have closed RIO out at least in Aug08 when RIO was about 30 but I was an optimist way too long.  I suspect that I was not alone.

Today I BTC 5 BRCD Jan09 10 Puts at a net cost of 3311.74.  That gives me a net loss of 6.19 per share.  Again, I should have closed BRCD out earlier, perhaps in Aug08 or again in Sep08 when it was just under 8.  Again, I was an optimist way too long and just did not believe that things would get so bad so fast.

After this I am still underwater in the account but can only do so much.  I suspect that there will be a bounce tomorrow since it is options expiration day.  I will be able to sell additional Covered Calls on the stocks that I still have in the account next week.

Today I sold 1 GE Nov08 15 Put for a net deposit of $94.25 in an IRA account.  If put to me my basis in these GE shares would be 14.06.

I just could not resist the opportunity to own GE at this depressed price, at least if it is put to me.  GE is currently paying a dividend aver 8% at it current price.  Just a few minutes ago GE announced that it will continue to pay its current dividend.  That was the final catalyst that caused me to sell this put as GE trades just a few pennies over 15.

I normally try to trade at least two contracts but am still feeling cautious, despite my feelings for GE, that I am only making small trades at a time.  The fact that I don’t have a great deal of available cash right now reinforces the smaller trades.