I exited my Northern Technology (NTI) short put (bullish) position today as the stock ran up toward $23 a share. Of course, I didn’t get the last dollar of potential profit, but that’s not my goal.
What happened next amazed me. About a half hour before the close, the stock started dropping like a stone, falling as low as $20.24. Since I entered the trade by selling those $22.50 puts for about $2 each, if I had still held the position, it would have been a net loss at that point. Boy, did I feel lucky.
Then, almost as quickly, the stock started going back up, closing the day right around $22 a share.
I even started playing “what if” in my mind, thinking how I could have re-entered the position for even more potential profit.
But I didn’t, and I’m glad. Read the rest of this entry »