Thursday, October 4, 2012

Exit of October Option Portfolio On Profit Target

Yesterday, the monthly income portfolio reached the initial profit target with 15 days left. The portfolio was closed to eliminate risks. November portfolio will get started next week.
With the far OTM options in SPX, it took about 20 minutes to have one OTM spread to get filled even if the prices was set $0.20 above mid price. For RUT, one OTM option was too far to have a quote. I set closing price to mid price. Even if the spread could not be closed, there is extreme small chance to endanger it. In the end, the spread was filled as well, after may be one hour as RUT price moved.

It looks like if the option price is too far out-of-the-money (<$1.0 or $2.00) for SPX or RUT, the bid/ask   of the option price are likely to cause fill issues. Of course, for option sellers the spreads can expire worthless to get full profit potential, with extremely low probability of risks.

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