Closed my June $17.50 puts on AFSI for $0.15.
After I sold these puts, I put in a buy-to-close order to sell as soon as I'd made 80% of my potential profits. This is my SOP when selling puts.
Remember, I sold these puts on January 20 for $0.90.
The term of the put was six months. Holding to expiration would have paid me 5.14%, or 0.86% per month. [ $0.90/$17.50 * 100 = 5.14% 5.14%/6 months = 0.86% per month ]
I bought the put back early, having made 80% of my potential profit. The effective term was four months. My profit was $0.75 or 4.29% total or 1.07% per month [ $0.90 - 0.15 = $0.75. $0.75/$17.5 *100 = 4.29% 4.29%/4 months = 1.07% per month ]
So by closing early, I made 0.21% per month more than I would if I had just held the out-of-the-money puts to expiration.
0.21% per month isn't much, but it's 2.52% annualized--more than my bank account is paying right now.
