Options Update: March 2017

I report my options trading activity monthly, usually after options expiration Friday. Doing so allows me to report on expired or assigned options. I also report new options trades and provide a running tally of DivGro's options income to date.

As I mentioned in my Monthly Review for March, I'm finding it challenging to keep DivGro up to date, as work is occupying much of my time. So this update is quite a bit late! In fact, last Friday was option expiration Friday for April, so the clock is already ticking for my next options update!

In February's update, I reported five new options trades and several of rolled trades. I also closed one contract early, while four options expired and one got assigned.

This month, two options got assigned and one expired, while I rolled forward three trades. I have only one new option trade to report. This month, I added only $304 to my tally of secured options income.

Assigned Options

When an option holder exercises an option, it is set to be assigned. In March, two options I sold got assigned, one call and one put.

KMB Call

On 25 November 2016, I sold a $120 call option on KMB with an expiration date of 17 April 2017. Compared with KMB's yield of 3.10% at the time, the annualized yield of the call was 5.69% or 1.84 times the annual dividend income!

#032 :   1

x

KMB 21 Apr 2017 120.00 C

::

$    272.30

After beating fourth-quarter earnings expectations, KMB's share price climbed more than 10% and well past my call option's $120 strike price. Unfortunately, I couldn't find a suitable way to roll forward this option, so I just waited for the option to be assigned.

Nevertheless, I recorded a net gain of $585, or 4.93% on the original amount invested.

GE Put

On 17 January 2017, I sold the three $31 put options on GE with an expiration date of 3 March 2017, which got assigned:

#048 :   3

x

GE 03 Mar 2017 31.00 P

::

$    178.52

When taking the options income into account, I ended up paying $30.40 per share, a little more than what shares traded for on 3 March (KMB closed at $30.12 on 3 March).

The "loss" is small enough that it doesn't concern me too much. I've benefitted a lot by selling puts on stocks I wouldn't mind owning, so I'm not going to change my ways because this one didn't quite work out!

Expired Options

In March, only one of my short options expired:

#034 :   1

x

VLO 17 Mar 2017 70.00 C

::

$    104.30

VLO closed at $68.90 on options expiration Friday, so the $70 covered call options I sold expired. 

Rolled Options

Usually, I sell options that are out of the money and a couple of months away from expiration. I try to strike a reasonable balance between the risk of option assignment and the premium income on offer.

Sometimes, the price of an underlying stock moves faster than anticipated and causes the option I sold to go in the money well before expiration. For covered calls, this means that the underlying stock is trading above the strike price and my shares will be called away on (or before) the expiration date. Likewise, for put contracts, the underlying stock is trading below the strike price, and I'll be expected to buy shares at the higher strike price on (or before) the expiration date.

While I could just wait for option assignment, another possibility is to roll forward the option. This means buying back the option, likely at a higher price than the original premium I collected and selling another option with a later expiration date.

In March, I rolled forward the following options:

#064 :   1	x	TGT 19 Jan 2018 65.00 C	::	$      93.00	($        -1.10)
#063 :   1	x	PG 15 Dec 2017 90.00 C	::	$    492.00	($        -1.11)
#062 :   2	x	PFE 15 Sep 2017 35.00 C	::	$    220.00	($        -1.29)
#061 :   1	x	TGT 20 Oct 2017 75.00 C	::	$    157.00	($        -5.68)	→ #064
#042 :   1	x	PG 17 Mar 2017 87.50 C	::	$    121.30	($    -382.09)	→ #063
#031 :   2	x	PFE 17 Mar 2017 33.00 C	::	$    123.60	($    -295.29)	→ #062

The cost to roll forward these options are shown in parentheses. Rolling the PFE option forward cost me more than I collected in option income, but the call is a $35 call instead of a $33 call, so that's OK.

New Covered Calls

None.

New Put Contracts

Selling put options allows me to set the price I'm willing to pay for a stock I want to buy. In effect, I get paid while waiting for the share price to drop! I sold only one put contract in this period:

---

#065 : 2017-03-20: Sold to Open 1 Contract of Option WBA Apr 21 2017 84.00 P

I'm willing to buy 100 shares of Walgreens Boots Alliance, Inc. (WBA) for $84.00 per share on or before 21 April. WBA closed at $84.63 per share on the date of my trade:

Open Date :  2017-03-20 Expiration Date :  2017-04-21     Number of Days in Trade :  32 Price at Close :  $84.63 per share Discount at Strike Price :  0.74% Strike Price :  $84.00 per share Number of Contracts : 1 Number of Shares : 100 Put Premium :  $1.84 per share Options Income :  $184.00 Commission :  $1.10 Net Premium :  $1.829 per share Net Options Income :  $182.90 Options Yield :  2.16% Annualized Options Yield :  24.67% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $82.17 Discount if Exercised :  2.91%

This put option trade yields 2.16%, or 24.67% on an annualized basis. At $84.63 per share, WBA yields 1.77%, so I'm boosting dividend income by a factor of 13.92. If the option is exercised, I'll buy 100 shares at a cost basis of $82.17 per share, a discount of 2.91%.

---

Selling puts is riskier than selling covered calls. Generally, I like to see a dividend boost factor of five or more, unless I can buy shares at a discount of at least 10%. WBA easily beats my boost factor threshold. 

Options Income Tally

Here is a running tally of the total amount received from options trades, as well as the options premiums secured due to options that expired:

key:  open • expired  •  closed  •  assigned  •  rolled 

ID	DATE	:	NO	×	TICKER OPTION	INCOME	( EXPENSES )	ROLLED	TOTAL	➤ SECURED
#065	2017-03-20	:	1	×	WBA 21 Apr 2017 $84.00 P	$    184.00	( $        -1.10 )		$ 10,953.65	➤ $ 4,386.65
#064	2017-03-17	:	1	×	TGT 19 Jan 2018 $65.00 C	$      93.00	( $        -1.10 )		$ 10,770.75	➤ $ 4,387.75
#063	2017-03-17	:	1	×	PG 15 Dec 2017 $90.00 C	$    492.00	( $        -1.11 )		$ 10,678.85	➤ $ 4,388.85
#062	2017-03-17	:	2	×	PFE 15 Sep 2017 $35.00 C	$    220.00	( $        -1.29 )		$ 10,187.96	➤ $ 4,389.96
#061	2017-02-24	:	1	×	TGT 20 Oct 2017 $75.00 C	$    157.00	( $        -5.68 )	→ #064	$ 9,969.25	➤ $ 4,391.25
#060	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    580.00	( $        -1.00 )		$ 9,817.93	➤ $ 4,239.93
#059	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    573.00	( $        -1.30 )		$ 9,238.93	➤ $ 4,240.93
#058	2017-02-24	:	1	×	PFE 15 Sep 2017 $35.00 C	$    113.00	( $        -1.00 )		$ 8,667.23	➤ $ 4,242.23
#057	2017-02-24	:	3	×	INTC 19 May 2017 $35.00 P	$    270.00	( $        -2.88 )		$ 8,555.23	➤ $ 4,243.23
#056	2017-02-24	:	10	×	F 16 Jun 2017 $13.00 C	$    350.00	( $        -7.96 )		$ 8,288.11	➤ $ 4,246.11
#055	2017-02-24	:	2	×	CVS 19 May 2017 $75.00 P	$    184.00	( $        -0.99 )		$ 7,946.07	➤ $ 4,254.07
#054	2017-02-24	:	2	×	ABBV 19 May 2017 $65.00 C	$    194.00	( $        -0.99 )		$ 7,763.06	➤ $ 4,255.06
#053	2017-02-10	:	2	×	QCOM 17 Mar 2017 $55.00 C	$    177.00	( $    -374.58 )	→ #059	$ 7,570.05	➤ $ 4,256.05
#052	2017-02-07	:	2	×	QCOM 10 Feb 2017 $53.50 C	$      42.00	( $    -108.37 )	→ #053	$ 7,767.63	➤ $ 4,453.63
#051	2017-01-26	:	2	×	QCOM 17 Mar 2017 $52.50 P	$    336.00	( $      -42.58 )		$ 7,834.00	➤ $ 4,520.00
#050	2017-01-20	:	2	×	TGT 21 Jul 2017 $70.00 P	$ 1,540.00	( $        -2.60 )		$ 7,540.58	➤ $ 4,226.58
#049	2017-01-20	:	1	×	D 21 Apr 2017 $75.00 C	$    248.00	( $        -0.40 )		$ 6,003.18	➤ $ 4,229.18
#048	2017-01-17	:	3	×	GE 03 Mar 2017 $31.00 P	$    180.00	( $        -1.48 )		$ 5,755.58	➤ $ 4,229.58
#047	2017-01-17	:	3	×	INTC 03 Mar 2017 $36.00 P	$    243.00	( $      -49.35 )	→ #057	$ 5,577.06	➤ $ 4,051.06
#046	2017-01-20	:	1	×	GILD 16 Jun 2017 $85.00 C	$    298.00	( $        -1.10 )		$ 5,383.41	➤ $ 3,857.41
#045	2016-12-27	:	4	×	F 17 Mar 2017 $13.00 C	$    120.00	( $      -36.17 )	→ #056	$ 5,086.51	➤ $ 3,858.51
#044	2016-12-27	:	1	×	TGT 21 Apr 2017 $77.50 C	$    200.00	( $      -20.28 )	→ #061	$ 5,002.68	➤ $ 3,774.68
#043	2016-12-23	:	2	×	TGT 20 Jan 2017 $72.50 P	$    246.00	( $ -1,560.96 )	→ #050	$ 4,822.96	➤ $ 3,594.96
#042	2016-12-23	:	1	×	PG 17 Mar 2017 $87.50 C	$    129.00	( $    -389.79 )	→ #063	$ 6,137.92	➤ $ 4,909.92
#041	2016-12-23	:	1	×	KO 19 May 2017 $42.00 C	$    136.00	( $        -7.70 )		$ 6,398.71	➤ $ 5,170.71
#040	2016-12-23	:	1	×	CSCO 21 Apr 2017 $32.00 C	$      53.00	( $        -7.70 )		$ 6,270.41	➤ $ 5,178.41
#039	2016-12-21	:	3	×	INTC 17 Feb 2017 $35.00 P	$    189.00	( $        -9.10 )		$ 6,225.11	➤ $ 5,186.11
#038	2016-12-21	:	3	×	T 17 Feb 2017 $40.00 P	$    150.00	( $        -9.10 )		$ 6,045.21	➤ $ 5,006.21
#037	2016-12-09	:	1	×	KO 18 May 2017 $43.00 C	$    120.00	( $        -7.70 )		$ 5,904.31	➤ $ 4,865.31
#036	2016-12-05	:	1	×	ABBV 17 Feb 2017 $62.50 C	$    161.00	( $        -7.70 )		$ 5,792.01	➤ $ 4,873.01
#035	2016-12-05	:	1	×	DIS 16 Jun 2017 $105.00 C	$    315.00	( $        -7.70 )		$ 5,638.71	➤ $ 4,719.71
#034	2016-12-05	:	1	×	VLO 17 Mar 2017 $70.00 C	$    112.00	( $        -7.70 )		$ 5,331.41	➤ $ 4,727.41
#033	2016-12-05	:	2	×	TROW 21 Apr 2017 $65.00 P	$    230.00	( $        -8.40 )		$ 5,227.11	➤ $ 4,623.11
#032	2016-11-25	:	1	×	KMB 21 Apr 2017 $120.00 C	$    280.00	( $        -7.70 )		$ 5,005.51	➤ $ 4,631.51
#031	2016-11-25	:	2	×	PFE 17 Mar 2017 $33.00 C	$    132.00	( $    -303.69 )	→ #062	$ 4,733.21	➤ $ 4,359.21
#030	2016-11-25	:	1	×	ABBV 17 Feb 2017 $62.50 C	$    161.00	( $        -7.70 )		$ 4,904.90	➤ $ 4,530.90
#029	2016-11-25	:	2	×	CSCO 21 Apr 2017 $32.00 C	$    104.00	( $        -8.40 )		$ 4,751.60	➤ $ 4,377.60
#028	2016-11-25	:	1	×	DIS 16 Jun 2017 $105.00 C	$    270.00	( $        -7.70 )		$ 4,656.00	➤ $ 4,386.00
#027	2016-11-25	:	1	×	QCOM 17 Feb 2017 $70.00 C	$    202.00	( $        -8.70 )		$ 4,393.70	➤ $ 4,393.70
#026	2016-11-25	:	1	×	QCOM 17 Feb 2017 $70.00 C	$    200.00	( $        -8.70 )		$ 4,200.40	➤ $ 4,200.40
#025	2016-11-25	:	3	×	CSCO 16 Dec 2016 $30.00 P	$    120.00	( $        -9.10 )		$ 4,009.10	➤ $ 4,009.10
#024	2016-11-25	:	6	×	F 17 Mar 2017 $13.00 C	$    150.00	( $      -50.77 )	→ #056	$ 3,898.20	➤ $ 3,898.20
#023	2016-10-14	:	2	×	WMT 18 Nov 2016 $67.50 P	$    256.00	( $        -8.40 )		$ 3,798.97	➤ $ 3,798.97
#022	2016-10-14	:	1	×	HSY 20 Jan 2017 $90.00 P	$    203.00	( $        -7.70 )		$ 3,551.37	➤ $ 3,551.37
#021	2016-10-14	:	1	×	GD 20 Jan 2017 $130.00 P	$    135.00	( $        -7.70 )		$ 3,356.07	➤ $ 3,356.07
#020	2016-10-11	:	2	×	WFC 18 Nov 2016 $44.00 P	$    170.00	( $        -8.40 )		$ 3,228.77	➤ $ 3,228.77
#019	2016-10-07	:	2	×	NKE 16 Dec 2016 $50.00 P	$    218.00	( $        -8.40 )		$ 3,067.17	➤ $ 3,067.17
#018	2016-09-26	:	1	×	KO 16 Dec 2016 $42.00 C	$    115.00	( $        -7.70 )		$ 2,857.57	➤ $ 2,857.57
#017	2016-09-26	:	6	×	F 20 Jan 2017 $11.00 P	$    198.00	( $      -11.21 )		$ 2,750.27	➤ $ 2,750.27
#016	2016-09-26	:	1	×	GILD 17 Feb 2017 $95.00 C	$    112.00	( $    -241.79 )	→ #046	$ 2,563.48	➤ $ 2,563.48
#015	2016-09-26	:	1	×	PFE 17 Mar 2017 $35.00 C	$      82.00	( $      -18.69 )		$ 2,693.27	➤ $ 2,693.27
#014	2016-09-26	:	1	×	UNP 16 Dec 2016 $97.50 C	$    218.00	( $      -24.92 )		$ 2,629.96	➤ $ 2,629.96
#013	2016-09-26	:	2	×	PFE 28 Oct 2016 $34.00 P	$    128.00	( $      -25.40 )		$ 2,436.88	➤ $ 2,436.88
#012	2016-09-08	:	1	×	JNJ 18 Nov 2016 $115.00 P	$    143.00	( $        -7.70 )		$ 2,334.28	➤ $ 2,334.28
#011	2016-09-07	:	1	×	RAI 17 Feb 2017 $52.50 C	$    132.00	( $        -7.70 )		$ 2,198.98	➤ $ 2,198.98
#010	2016-09-07	:	1	×	KMB 21 Oct 2016 $130.00 C	$    120.00	( $        -7.70 )		$ 2,074.68	➤ $ 2,074.68
#009	2016-09-07	:	1	×	D 20 Jan 2017 $75.00 C	$    307.00	( $      -73.09 )		$ 1,962.38	➤ $ 1,962.38
#008	2016-08-30	:	3	×	INTC 21 Oct 2016 $35.00 P	$    258.00	( $        -9.10 )		$ 1,728.47	➤ $ 1,728.47
#007	2016-08-30	:	3	×	CSCO 21 Oct 2016 $31.00 C	$    294.00	( $      -26.17 )		$ 1,479.57	➤ $ 1,479.57
#006	2016-08-29	:	6	×	F 18 Nov 2016 $13.00 C	$    168.00	( $      -11.21 )		$ 1,211.74	➤ $ 1,211.74
#005	2016-08-26	:	1	×	DIS 18 Nov 2016 $100.00 C	$    121.00	( $        -7.70 )		$ 1,054.95	➤ $ 1,054.95
#004	2016-08-09	:	3	×	CSCO 19 Aug 2016 $31.00 P	$    207.00	( $      -26.10 )		$    941.65	➤ $    941.65
#003	2016-08-09	:	1	×	DIS 19 Aug 2016 $98.50 C	$      95.00	( $        -7.70 )		$    760.75	➤ $    760.75
#002	2016-06-16	:	1	×	TGT 20 Jan 2017 $65.00 P	$    370.00	( $      -12.04 )		$    673.45	➤ $    673.45
#001	2016-06-01	:	6	×	F 19 Aug 2016 $13.00 C	$    330.00	( $      -14.51 )		$    315.49	➤ $    315.49

key:  expired  •  closed  •  rolled  •  assigned  •  open 

For a complete listing of all options transactions, please visit my Options History page.

Goals Progress

I'm hoping to earn $8,400 in options income in 2017. I'm only counting secured options income, or income from options with no further obligations.

	Total Options Income		Secured Options Income
This Month:	$ 10,954		$   4,387
Last Month:	$ 10,661		$   4,083
Difference:	$      303		$      304

Year to date I've earned $1,875 in options income or 22.3% of my options income goal for 2017.

Take care everybody and thanks for reading!

I'm still a learner options trader. If you see anything you disagree with or question, please let me know in the comments below. Or if you just want to share some advice or encouragement, I'd be happy to hear from you, too!