2 Recent Options Trades Adding $358.90 Income

Since my last options trades update, I made 2 recent trades adding $358.90 options income. Both were sales of put options of intermediate duration.

Here is an updated options trade tracker:

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ID	Action	Type	No.	Security	T. Date	Exp Date	Days	Days left	Strike	C. Price	% from Strike	T. Price Open	Comm. /Fees Open	Cost basis	Exp. Ratio	C. Price	C. Value	Unreal. P/L	Intrinsic Value	Time Value	Status	Short Put Commit	T. Price Close	Comm. /Fees Close	Price at Exp	Assign Implied Loss	Total Expenses	Total Income	Secured Income
													(16.27)	(2,447.73)	0.66%		(2,586.02)	(138.29)	(13,363.00)	15,949.02		39,400.00
1	S	C	1	AN	1/12/2018	2/16/2018	35	17	65	61.09	-6.02%	0.25	(1.09)	(23.91)	4.56%	0.5575	(55.75)	(31.84)	(3.91)	4.47	Open	0						23.91	0
2	S	C	1	ATGE	1/12/2018	2/16/2018	35	17	50	45.8	-8.40%	1.09	(0.30)	(108.70)	0.28%	0.8174	(81.74)	26.96	(4.20)	5.02	Open	0						132.61	0
3	S	P	3	MAT	1/12/2018	2/23/2018	42	24	13	15.99	23.00%	0.41	(4.93)	(118.07)	4.18%	0.3402	(102.06)	16.01	(2.99)	3.33	Open	3900						250.68	0
4	S	C	3	SQQQ	1/12/2018	2/16/2018	35	17	21	16.85	-19.76%	0.34	(4.93)	(97.07)	5.08%	0.1243	(37.29)	59.78	(4.15)	4.27	Open	0						347.75	0
5	S	C	1	TZA	1/12/2018	3/16/2018	63	45	11	11.14	1.27%	0.74	(1.10)	(72.90)	1.51%	0.7756	(77.56)	(4.66)	0.14	0.64	Open	0						420.65	0
6	S	C	1	EXC	1/16/2018	4/20/2018	94	80	40	38.29	-4.28%	0.7	(0.30)	(69.70)	0.43%	0.5603	(56.03)	13.67	(1.71)	2.27	Open	0						490.35	0
7	S	P	1	AAP	1/16/2018	1/17/2020	731	717	90	119.27	32.52%	10.8	(0.37)	(1,079.63)	0.03%	9.5939	(959.39)	120.24	(29.27)	38.86	Open	9000						1,569.98	0
8	S	P	1	CELG	1/16/2018	9/21/2018	248	234	90	101.58	12.87%	3.6	(0.80)	(359.20)	0.22%	4.825	(482.50)	(123.30)	(11.58)	16.41	Open	9000						1,929.18	0
9	S	C	1	WMT	1/16/2018	2/23/2018	38	24	108	107.73	-0.25%	0.86	(1.10)	(84.90)	1.30%	3.2386	(323.86)	(238.96)	(0.27)	3.51	Open	0						2,014.08	0
10	S	P	1	HSIC	1/17/2018	7/20/2018	184	171	55	78.07	41.95%	0.75	(0.25)	(74.75)	0.33%	0.5741	(57.41)	17.34	(23.07)	23.64	Open	5500						2,088.83	0
11	S	P	1	AYI	1/30/2018	8/20/2018	202	202	120	158.34	31.95%	3.6	(1.10)	(358.90)	0.31%	3.5243	(352.43)	6.47	(38.34)	41.86	Open	12000						2,447.73	0

And my 2 recent options trades:

Trade ID#10: Sold put option on HSIC strike 55 exp 07/20/18 for $74.75 income after fees.

HSIC is a solid healthcare stock. I currently own 72 shares with an average cost basis of $73.05. The stock currently trades around $78. Would I be happy to buy 100 shares of the stock at $55 today and hold it for at least 7 months? Most certainly! To get $74.75 for the privilege? That is simply icing on the cake. The only risk to this trade is if something horrible were to happen, e.g. a major scandal involving the company, and the shares were to nosedive to well below $55 in the near future. That is a small enough risk I am willing to assume.

Trade ID#11: Sold put option on AYI strike 120 exp 08/20/18 for $358.90 income after fees.

AYI is a tax-efficient growth stock that appears to be temporarily depressed. I would certainly be happy to buy 100 shares of the stock at $120 today and hold it for at least 8 months. Getting paid $358.90 for the privilege is a no-brainer. I don't really see AYI falling below $120, so the premium is probably secure, but if it did, I would have equally happy buying at $120. In fact, I would buy a lot more if it fell below $120.

As I stated in my earlier post on options, selling put options is my favorite trade because it has the best risk-reward ratio. If I'm happy to buy today a stock that I would hold indefinitely at the current market price, I am happier still to get paid a premium for agreeing to buy the stock at a discount price. There are but two risks to selling put options: that the stock might drop precipitously well below the strike price before the option expires, and that the option does not get into the money and the stock goes up and away. By restricting the sale of put options on high quality hold-forever stocks, the downside risk is thereby limited. The second risk is more of an opportunity cost risk when cash is used to secure the sale of a put option rather than investing in the stock outright to capture the upside gain. This is less of a risk for a margin account where I would not have used the margin to buy the stock outright in the first place. It is a very real opportunity cost for a cash account, however.