A weeks ago we discusses a strategy for using put options to create money out of thin air. In our example, we sold put options on stock symbol CIGX for after commission proceeds of $0.35 a share. In order to put on this trade we had to tie up $4 in capital per share.
If the stock traded below $4 up until June 17th, we would be forced to buy shares of stock for $4 regardless of where the price went to. If the stock remained above $4, we would get to keep our original monies for taking on the risk.
In this, our third installment of creating money out of thin air, we wanted to give an update to how the trade played out.
On Friday June 17th, CIGX finished the day trading at $4.42, which was above our threshold of $4.00. This allowed our obligation to purchase shares for $4 to expire and we were able to keep the all the original money we took in for our troubles.
We are currently investigating this stock further and have not decided as to whether we will put on this same trade again for July expiration. At current price levels, we can sell put options and take in between $0.45 and $0.55 per share for agreeing to purchase the stock for $4.00 up to July 15.
This stock is risky, thus the high premiums you can receive for putting on this trade, however it is showing a lot of support at $4.00.
We will let you know if we decide to use this stock again or whether we choose an entirely different stock for this month’s put option sell.