Tuesday, April 3, 2018

Options Update: March 2018

Welcome to my monthly options update!

Here, I shall write monthly options update articles to keep track of options trades in my portfolio. Each options update serves as a status report on the open options and the obligations I have. A running tally of all my options trades and income to date are found on the Options page.

Assigned Options

No options got assigned in March.

Expired Options

One option I sold expired worthless this monthly, securing me $72.90 options income.



Trade #5: Call option on TZA strike 11 exp 03/15/18 for $72.90 income after fees. Price at expiration: $10.79, only 1.91% from strike. That was a close one. A market rally on the day before option expiration dropped TZA just below 11 to expire worthless out of the money.

Closed Options

When an out of the money option goes further out of the money, one may close the option early and secure most of the options income.

I did not close any options early in March.

Rolled Options

An option can be rolled forward by buying back an option and selling another option with a later expiration date. Rolling is done to avoid options assignment for in the money options.

No open options were rolled forward in March.

New Calls Options Sold

Selling calls is a way to earn premiums from time decay on securities that are unlikely to reach a certain strike price within a certain time frame. This is best done on stocks you already own so as to limit liabilities should the underlying security shoot to the moon.

I sold 2 calls in March, netting a total of $461.86 income after fees:

Trade #15: Sold call option on SQQQ strike 20 exp 09/21/18 for $222.21 income after fees.
Trade #17: Sold call option on SQQQ strike 20 exp 09/21/18 for $239.65 income after fees.

At the time I sold the first call (trade #15), SQQQ was trading around $16.75, with a lot of value for time premium. I figured I'd be happy to sell SQQQ at around $22 and hold on even if it temporarily shot up above that, because eventually it will go to zero. As SQQQ went up as the market went down some more, I sold another call (trade #17) for a slightly higher premium. I probably should have waited a little longer as these trades are now solidly in the red. O well.

New Put Options Sold

Selling put options is a way to earn premium for agreeing to buy a stock at a given price for a period of time. This is best done with high quality, buy and hold stocks that have limited downside.

I sold 5 puts in March, netting a total of $1,143.58 income after fees:

Trade #14: Sold put option on CVS strike 55 exp 01/18/19 for $222.21 income after fees.
Trade #16: Sold put option on MAT strike 12 exp 07/20/18 for $108.91 income after fees.
Trade #18: Sold put option on SRCL strike 50 exp 11/16/18 for $298.90 income after fees.
Trade #19: Sold put option on CVS strike 55 exp 01/18/19 for $338.90 income after fees.
Trade #20: Sold put option on BEN strike 32 exp 10/19/18 for $174.66 income after fees.

I sold put on CVS as it fell to new 52-week low and sold another one for a richer premium as it continued to drop. CVS seems like a good buy and hold stock at $55. I also took the opportunity to sell some puts on MAT, SRCL, and BEN as they dropped in price. 

Options Expiring Next Month

The following option expire in April:

Trade #6: Sold call option on EXC strike 40 exp 04/20/18 for $69.70 income after fees. Currently slightly out of the money, 2.8% below strike. This might get exercised if EXC could rally a little, which is okay with me, because it is a slow growth utility stock and the money can be put to better use elsewhere.

Cumulative Options Income Summary


As of March 2018:

                             Cumulative      Cumulative Secured
                          Options Income   Options Income
                                                       
This Month:           $  4,509.23             $  505.55
Last Month:           $  3,906.34             $  432.65
Difference:             $  1,602.89              $   72.90

Thanks for reading!

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