Monday, June 1, 2020

Options Update: May 2020

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.

This was a quiet month for me, as I did trade any options.

Assigned Options

No options got assigned this month.


Expired Options

No options expired worthless this month.

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 this month.

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.

I did not roll any options this month.

New Call 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 did not sell any call options this month.

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 did not sell any put options this month.

Options Expiring Next Month

Five options will expire next month:
Trade #40: Sold 1 BMY1 put option strike 60 exp 6/19/20 for $768.90 net premium on 12/20/18. It is so far out of the money that its current price 0.0001 says it all. This will expire worthless.

Trade #50: Sold 1 RCL put option strike 75 exp 6/19/20 for $908.88 net premium on 2/26/20. It is 27% in the money, very likely to get assigned. I will effectively be buying 100 shares of RCL at 65.91.

Trade #51: Bought 1 RCL call option strike 80 exp 6/19/20 for $1042.09 net premium on 2/26/20. It is 32% out of the money, very likely to expire worthless. This trade was a dumb move in retrospect. I had not expected the stock to drop like a rock back in February, and thought that even at 90.42 breakeven price it was a good entry point.

Trade #52: Sold 1 RCL put option strike 60 exp 6/19/20 for $1398.87 net premium on 3/9/20. It is 9% in the money, likely to get assigned. I will effectively be buying 100 shares of RCL at 46.01.

Trade #53: Bought 1 RCL call option strike 60 exp 6/19/20 for $1100.79 net premium on 3/9/20. It is 9% out of the money, likely to expire worthless. This trade was a dumb move in retrospect. Buying options has been losing me a lot of money so far. I need to stop doing this.

Cumulative Options Income Summary

As of May 2020:

                             Cumulative      Cumulative Secured
                          Options Income    Options Income
         
This Month:           $ 18,476.13            $   7,788.10
Last Month:           $ 18,476.13            $   7,788.10
Difference:             $              0            $               0

Current unrealized gain/(loss)*: (95.91), down from ($1.513.57) last month, thanks to market rebound.
Total realized and unrealized gain/(loss): $18,380.22

*Note: Unrealized gain increases the chance of eventually securing option income, while unrealized loss does the opposite.

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