Options Update: June 2017

Welcome to my options update for June!

I report my options trades monthly, usually shortly after options expiration Friday. I list assigned, expired, closed, and rolled options and I report new options. Finally, I provide a running tally of DivGro's options income to date and I discuss the progress I'm making towards achieving my 2017 options income goal.

In last month's option update I added $1,635 to my tally of secured options income. This month I'm adding only $469, but I'm making great progress to achieving my goal of earning $8,400 in options income in 2017.

In June, two options expired and I traded four new covered calls and six new put contracts. Following are details of all my options trades.

Assigned Options

When an option holder exercises an option, it is set to be assigned.

None of the options contracts I previously sold got assigned in June.

Expired Options

In June, two of my short options expired, one put option and one call option:

#075 :   3	x	INTC 16 Jun 2017 35.00 P	::	$    189.00
#073 : 20	x	F 16 Jun 2017 12.00 C	::	$    320.00

On options expiration day, Intel Corporation (INTC) closed at $35.21 and Ford Motor Company (F) closed at $11.22, respectively, so both short put options expired.

Closed Options

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

I did not close any options early in June. 

Rolled Options

Rolling forward options means buying back an option and selling another option with a later expiration date. You can do this to avoid options assignment for in the money options.

I did not roll forward any options in June.

New Covered Calls

Selling covered calls is a way to collect extra income on stocks you already own. Since my last update, I executed four new covered call trades:

---

#085 : 2017-06-16: Sold to Open 1 Contract of Option VLO Dec 15 2017 70.00 C

I own 100 shares of Valero Energy Corporation (VLO) at a cost basis of $61.57 per share. I'm willing to sell these shares for $70.00 on or before 15 December:

Open Date :  2017-06-16 Expiration Date :  2017-12-15     Number of Days in Trade :  182 Cost Basis :  $61.57 per share Gain at Strike Price :  13.69% Strike Price :  $70.00 per share Number of Contracts : 1 Number of Shares : 100 Call Premium :  $2.30 per share Options Income :  $230.00 Commission :  $0.80 Net Premium :  $2.292 per share Net Options Income :  $229.20 Options Yield :  3.72% Annualized Options Yield :  7.47% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $59.28 Gain if Exercised :  18.09%

This covered call yields 3.72%, or 7.47% on an annualized basis. The yield on cost of my VLO position is 4.55%, so I'm boosting dividend income by a factor of 1.64. If the option is exercised, I'll sell 100 shares of VLO at a reduced cost basis of $59.28 per share, for capital gains of 18.09%.

---

#088 : 2017-06-21: Sold to Open 20 Contracts of Option F Sep 15 2017 12.00 C

I own 2000 shares of Ford Motor Company (F) at a cost basis of $12.07 per share. I'm willing to sell these shares for $12.00 on or before 15 September:

Open Date :  2017-06-21 Expiration Date :  2017-09-15     Number of Days in Trade :  86 Cost Basis :  $12.07 per share Gain at Strike Price :  -0.58% Strike Price :  $12.00 per share Number of Contracts : 20 Number of Shares : 2000 Call Premium :  $0.11 per share Options Income :  $220.00 Commission :  $25.81 Net Premium :  $0.097 per share Net Options Income :  $194.19 Options Yield :  0.80% Annualized Options Yield :  3.42% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $11.97 Gain if Exercised :  0.23%

This covered call yields 0.80%, or 3.42% on an annualized basis. The yield on cost of my Ford Motor Company position is 4.97%, so I'm boosting dividend income by a factor of 0.69. If the options are exercised, I'll sell 2000 shares of Ford Motor Company at a reduced cost basis of $11.97 per share, for capital gains of 0.23%.

---

#089 : 2017-06-21: Sold to Open 2 Contracts of Option INTC Oct 20 2017 36.00 C

I own 200 shares of Intel Corporation (INTC) at a cost basis of $27.50 per share. I'm willing to sell these shares for $36.00 on or before 20 October:

Open Date :  2017-06-21 Expiration Date :  2017-10-20     Number of Days in Trade :  121 Cost Basis :  $27.50 per share Gain at Strike Price :  30.91% Strike Price :  $36.00 per share Number of Contracts : 2 Number of Shares : 200 Call Premium :  $0.76 per share Options Income :  $152.00 Commission :  $0.99 Net Premium :  $0.755 per share Net Options Income :  $151.01 Options Yield :  2.75% Annualized Options Yield :  8.29% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $26.74 Gain if Exercised :  34.60%

This covered call yields 2.75%, or 8.29% on an annualized basis. The yield on cost of my INTC position is 3.96%, so I'm boosting dividend income by a factor of 2.09. If the options are exercised, I'll sell 200 shares of INTC at a reduced cost basis of $26.74 per share, for capital gains of 34.60%.

---

#090 : 2017-06-21: Sold to Open 2 Contracts of Option TGT Jan 19 2018 65.00 C

I own 200 shares of Target Corporation (TGT) at a cost basis of $70.32 per share. I'm willing to sell these shares for $65.00 on or before 19 January:

Open Date :  2017-06-21 Expiration Date :  2018-01-19     Number of Days in Trade :  212 Cost Basis :  $70.32 per share Gain at Strike Price :  -7.57% Strike Price :  $65.00 per share Number of Contracts : 2 Number of Shares : 200 Call Premium :  $0.38 per share Options Income :  $76.00 Commission :  $1.97 Net Premium :  $0.370 per share Net Options Income :  $74.03 Options Yield :  0.53% Annualized Options Yield :  0.91% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $69.95 Gain if Exercised :  -7.08%

This covered call yields 0.53%, or 0.91% on an annualized basis. The yield on cost of my TGT position is 3.53%, so I'm boosting dividend income by a factor of 0.26. If the options are exercised, I'll sell 200 shares of TGT at a reduced cost basis of $69.95 per share, for a capital loss of 7.08%.

---

For covered calls, I think an achievable goal is to double dividend income. The covered call trades on INTC doubles dividend income, but those on VLO, F, and TGT do not.

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 six put contracts in this period:

---

#081 : 2017-06-16: Sold to Open 2 Contracts of Option AXP Jul 21 2017 80.00 P

I'm willing to buy 200 shares of American Express Company (AXP) for $80.00 per share on or before 21 July. AXP closed at $81.45 per share on the date of my trade:

Open Date :  2017-06-16 Expiration Date :  2017-07-21     Number of Days in Trade :  35 Price at Close :  $81.45 per share Discount at Strike Price :  1.78% Strike Price :  $80.00 per share Number of Contracts : 2 Number of Shares : 200 Put Premium :  $1.33 per share Options Income :  $266.00 Commission :  $1.00 Net Premium :  $1.325 per share Net Options Income :  $265.00 Options Yield :  1.63% Annualized Options Yield :  16.98% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $78.68 Discount if Exercised :  3.41%

This put option trade yields 1.63%, or 16.98% on an annualized basis. At $81.45 per share, AXP yields 1.57%, so I'm boosting dividend income by a factor of 10.80. If the options are exercised, I'll buy 200 shares at a cost basis of $78.68 per share, a discount of 3.41%.

---

#082 : 2017-06-16: Sold to Open 1 Contract of Option CVS Aug 18 2017 75.00 P

I'm willing to buy 100 shares of CVS Health Corporation (CVS) for $75.00 per share on or before 18 August. CVS closed at $77.06 per share on the date of my trade:

Open Date :  2017-06-16 Expiration Date :  2017-08-18     Number of Days in Trade :  63 Price at Close :  $77.06 per share Discount at Strike Price :  2.67% Strike Price :  $75.00 per share Number of Contracts : 1 Number of Shares : 100 Put Premium :  $2.22 per share Options Income :  $222.00 Commission :  $0.80 Net Premium :  $2.212 per share Net Options Income :  $221.20 Options Yield :  2.87% Annualized Options Yield :  16.64% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $72.79 Discount if Exercised :  5.54%

This put option trade yields 2.87%, or 16.64% on an annualized basis. At $77.06 per share, CVS yields 2.60%, so I'm boosting dividend income by a factor of 6.41. If the option is exercised, I'll buy 100 shares at a cost basis of $72.79 per share, a discount of 5.54%.

---

#083 : 2017-06-16: Sold to Open 3 Contracts of Option PPL Oct 20 2017 37.00 P

I'm willing to buy 300 shares of PPL Corp (PPL) for $37.00 per share on or before 20 October. PPL closed at $39.49 per share on the date of my trade:

Open Date :  2017-06-16 Expiration Date :  2017-10-20     Number of Days in Trade :  126 Price at Close :  $39.49 per share Discount at Strike Price :  6.31% Strike Price :  $37.00 per share Number of Contracts : 3 Number of Shares : 300 Put Premium :  $0.49 per share Options Income :  $147.00 Commission :  $0.11 Net Premium :  $0.490 per share Net Options Income :  $146.89 Options Yield :  1.24% Annualized Options Yield :  3.59% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $36.51 Discount if Exercised :  7.55%

This put option trade yields 1.24%, or 3.59% on an annualized basis. At $39.49 per share, PPL yields 4.00%, so I'm boosting dividend income by a factor of 0.90. If the options are exercised, I'll buy 300 shares at a cost basis of $36.51 per share, a discount of 7.55%.

---

#084 : 2017-06-16: Sold to Open 2 Contracts of Option TGT Oct 20 2017 45.00 P

I'm willing to buy 200 shares of Target Corporation (TGT) for $45.00 per share on or before 20 October. TGT closed at $52.61 per share on the date of my trade:

Open Date :  2017-06-16 Expiration Date :  2017-10-20     Number of Days in Trade :  126 Price at Close :  $52.61 per share Discount at Strike Price :  14.46% Strike Price :  $45.00 per share Number of Contracts : 2 Number of Shares : 200 Put Premium :  $1.24 per share Options Income :  $248.00 Commission :  $1.00 Net Premium :  $1.235 per share Net Options Income :  $247.00 Options Yield :  2.35% Annualized Options Yield :  6.80% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $43.77 Discount if Exercised :  16.81%

This put option trade yields 2.35%, or 6.80% on an annualized basis. At $52.61 per share, TGT yields 4.71%, so I'm boosting dividend income by a factor of 1.44. If the options are exercised, I'll buy 200 shares at a cost basis of $43.77 per share, a discount of 16.81%.

---

#086 : 2017-06-16: Sold to Open 2 Contracts of Option WMT Sep 15 2017 70.00 P

I'm willing to buy 200 shares of Wal-Mart Stores Inc (WMT) for $70.00 per share on or before 15 September. WMT closed at $75.24 per share on the date of my trade:

Open Date :  2017-06-16 Expiration Date :  2017-09-15     Number of Days in Trade :  91 Price at Close :  $75.24 per share Discount at Strike Price :  6.96% Strike Price :  $70.00 per share Number of Contracts : 2 Number of Shares : 200 Put Premium :  $1.23 per share Options Income :  $246.00 Commission :  $1.00 Net Premium :  $1.225 per share Net Options Income :  $245.00 Options Yield :  1.63% Annualized Options Yield :  6.53% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $68.78 Discount if Exercised :  8.59%

This put option trade yields 1.63%, or 6.53% on an annualized basis. At $75.24 per share, WMT yields 2.71%, so I'm boosting dividend income by a factor of 2.41. If the options are exercised, I'll buy 200 shares at a cost basis of $68.78 per share, a discount of 8.59%.

---

#087 : 2017-06-21: Sold to Open 5 Contracts of Option BAC Aug 18 2017 22.00 P

I'm willing to buy 500 shares of Bank of America Corporation (BAC) for $22.00 per share on or before 18 August. BAC closed at $23.13 per share on the date of my trade:

Open Date :  2017-06-21 Expiration Date :  2017-08-18     Number of Days in Trade :  58 Price at Close :  $23.13 per share Discount at Strike Price :  4.89% Strike Price :  $22.00 per share Number of Contracts : 5 Number of Shares : 500 Put Premium :  $0.38 per share Options Income :  $190.00 Commission :  $6.48 Net Premium :  $0.367 per share Net Options Income :  $183.52 Options Yield :  1.59% Annualized Options Yield :  9.99% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $21.63 Discount if Exercised :  6.47%

This put option trade yields 1.59%, or 9.99% on an annualized basis. At $23.13 per share, BAC yields 1.30%, so I'm boosting dividend income by a factor of 7.70. If the options are exercised, I'll buy 500 shares at a cost basis of $21.63 per share, a discount of 6.47%.

---

Selling puts is riskier than selling covered calls. Generally, I like to see a dividend boost factor of 5.00 or more, unless I can buy shares at a discount of at least 10%. Only the put contracts on PPL and WMT do not quite measure up.

Options Expiring in July

The following options expire in July, so I'll be monitoring these closely:

#081 :   2	x	AXP 21 Jul 2017 80.00 P	::	Closed at $83.08 on 27 Jun (3.8% safety margin)
#076 :   2	x	LOW 21 Jul 2017 80.00 P	::	Closed at $76.33 on 27 Jun (caution: 4.6% in the money)
#071 :   5	x	BAC 21 Jul 2017 20.00 P	::	Closed at $23.27 on 27 Jun (16.4% safety margin)
#060 :   2	x	QCOM 21 Jul 2017 57.50 C	::	Closed at $55.43 on 27 Jun (3.6% safety margin)
#059 :   2	x	QCOM 21 Jul 2017 57.50 C	::	Closed at $55.43 on 27 Jun (3.6% safety margin)

Lowe's Companies, Inc (LOW) is trading well below the $80 strike price of the put options I'd sold and the options can be assigned at any time. I'll monitor LOW's share price as the expiration date approaches and take appropriate action as needed.

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:  expired  •  closed  •  rolled  •  assigned  •  open 

ID	DATE	:	NO	×	TICKER OPTION	INCOME	( EXPENSES )	ROLLED	TOTAL	➤ SECURED
#090	2017-06-21	:	2	×	TGT 19 Jan 2018 $65.00 C	$      76.00	( $        -1.97 )		$ 14,904.57	➤ $ 7,408.57
#089	2017-06-21	:	2	×	INTC 20 Oct 2017 $36.00 C	$    152.00	( $        -0.99 )		$ 14,830.54	➤ $ 7,410.54
#088	2017-06-21	:	20	×	F 15 Sep 2017 $12.00 C	$    220.00	( $      -25.81 )		$ 14,679.53	➤ $ 7,411.53
#087	2017-06-21	:	5	×	BAC 18 Aug 2017 $22.00 P	$    190.00	( $        -6.48 )		$ 14,485.34	➤ $ 7,437.34
#086	2017-06-16	:	2	×	WMT 15 Sep 2017 $70.00 P	$    246.00	( $        -1.00 )		$ 14,301.82	➤ $ 7,443.82
#085	2017-06-16	:	1	×	VLO 15 Dec 2017 $70.00 C	$    230.00	( $        -0.80 )		$ 14,056.82	➤ $ 7,444.82
#084	2017-06-16	:	2	×	TGT 20 Oct 2017 $45.00 P	$    248.00	( $        -1.00 )		$ 13,827.62	➤ $ 7,445.62
#083	2017-06-16	:	3	×	PPL 20 Oct 2017 $37.00 P	$    147.00	( $        -0.11 )		$ 13,580.62	➤ $ 7,446.62
#082	2017-06-16	:	1	×	CVS 18 Aug 2017 $75.00 P	$    222.00	( $        -0.80 )		$ 13,433.73	➤ $ 7,446.73
#081	2017-06-16	:	2	×	AXP 21 Jul 2017 $80.00 P	$    266.00	( $        -1.00 )		$ 13,212.53	➤ $ 7,447.53
#080	2017-05-12	:	1	×	OC 18 Aug 2017 $60.00 P	$    210.00	( $        -1.95 )		$ 12,947.53	➤ $ 7,448.53
#079	2017-05-12	:	2	×	KO 19 Jan 2018 $45.00 C	$    200.00	( $        -3.13 )		$ 12,739.48	➤ $ 7,450.48
#078	2017-05-12	:	2	×	DIS 15 Dec 2017 $110.00 C	$ 1,090.00	( $        -1.01 )		$ 12,542.61	➤ $ 7,453.61
#077	2017-05-12	:	2	×	ABBV 15 Sep 2017 $67.50 C	$    408.00	( $        -1.60 )		$ 11,453.62	➤ $ 7,454.62
#076	2017-04-21	:	2	×	LOW 21 Jul 2017 $80.00 P	$    408.00	( $        -1.00 )		$ 11,047.22	➤ $ 7,456.22
#075	2017-04-21	:	3	×	INTC 16 Jun 2017 $35.00 P	$    189.00	( $        -3.86 )		$ 10,640.22	➤ $ 7,457.22
#074	2017-04-21	:	2	×	GILD 15 Sep 2017 $75.00 C	$    210.00	( $        -1.59 )		$ 10,455.08	➤ $ 7,272.08
#073	2017-04-21	:	20	×	F 16 Jun 2017 $12.00 C	$    320.00	( $        -9.11 )		$ 10,246.67	➤ $ 7,273.67
#072	2017-04-21	:	1	×	D 20 Oct 2017 $77.50 C	$    323.00	( $        -0.35 )		$ 9,935.78	➤ $ 6,962.78
#071	2017-04-21	:	5	×	BAC 21 Jul 2017 $20.00 P	$    160.00	( $        -2.28 )		$ 9,613.13	➤ $ 6,963.13
#070	2017-04-04	:	1	×	XOM 19 May 2017 $80.00 P	$    116.00	( $        -1.00 )		$ 9,455.41	➤ $ 6,965.41
#069	2017-04-04	:	2	×	INTC 19 May 2017 $36.00 P	$    192.00	( $        -0.99 )		$ 9,340.41	➤ $ 6,850.41
#068	2017-04-04	:	2	×	CSCO 18 Aug 2017 $31.00 P	$    146.00	( $        -0.99 )		$ 9,149.40	➤ $ 6,659.40
#067	2017-04-03	:	1	×	HRL 15 Sep 2017 $37.50 C	$      84.00	( $        -1.10 )		$ 9,004.39	➤ $ 6,660.39
#066	2017-04-03	:	1	×	CSCO 20 Oct 2017 $33.00 C	$    189.00	( $        -1.59 )		$ 8,921.49	➤ $ 6,661.49
#065	2017-03-20	:	1	×	WBA 21 Apr 2017 $84.00 P	$    184.00	( $        -1.10 )		$ 8,734.08	➤ $ 6,663.08
#064	2017-03-17	:	1	×	TGT 19 Jan 2018 $65.00 C	$      93.00	( $        -1.10 )		$ 8,551.18	➤ $ 6,480.18
#063	2017-03-17	:	1	×	PG 15 Dec 2017 $90.00 C	$    492.00	( $        -1.11 )		$ 8,459.28	➤ $ 6,481.28
#062	2017-03-17	:	2	×	PFE 15 Sep 2017 $35.00 C	$    220.00	( $        -1.29 )		$ 7,968.39	➤ $ 6,482.39
#061	2017-02-24	:	1	×	TGT 20 Oct 2017 $75.00 C	$    157.00	( $        -5.68 )	→ #064	$ 7,749.68	➤ $ 6,483.68
#060	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    580.00	( $        -1.00 )		$ 7,598.36	➤ $ 6,332.36
#059	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    573.00	( $        -1.30 )		$ 7,019.36	➤ $ 6,333.36
#058	2017-02-24	:	1	×	PFE 15 Sep 2017 $35.00 C	$    113.00	( $        -1.00 )		$ 6,447.66	➤ $ 6,334.66
#057	2017-02-24	:	3	×	INTC 19 May 2017 $35.00 P	$    270.00	( $      -42.70 )		$ 6,335.66	➤ $ 6,335.66
#056	2017-02-24	:	10	×	F 16 Jun 2017 $13.00 C	$    350.00	( $      -47.99 )		$ 6,108.36	➤ $ 6,108.36
#055	2017-02-24	:	2	×	CVS 19 May 2017 $75.00 P	$    184.00	( $        -0.99 )		$ 5,806.35	➤ $ 5,806.35
#054	2017-02-24	:	2	×	ABBV 19 May 2017 $65.00 C	$    194.00	( $    -366.58 )	→ #077	$ 5,623.34	➤ $ 5,623.34
#053	2017-02-10	:	2	×	QCOM 17 Mar 2017 $55.00 C	$    177.00	( $    -374.58 )	→ #059	$ 5,795.92	➤ $ 5,795.92
#052	2017-02-07	:	2	×	QCOM 10 Feb 2017 $53.50 C	$      42.00	( $    -108.37 )	→ #053	$ 5,993.50	➤ $ 5,993.50
#051	2017-01-26	:	2	×	QCOM 17 Mar 2017 $52.50 P	$    336.00	( $      -42.58 )		$ 6,059.87	➤ $ 6,059.87

key:  expired  •  closed  •  rolled  •  assigned  •  open 

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

Goals Progress

I'm counting secured options income, which is income from options with no further obligations.

	Total Options Income		Secured Options Income
This Month:	$ 14,905		$   7,409
Last Month:	$ 12,948		$   6,940
Difference:	$   1,957		$      469

I started 2017 with $2,512 in secured options income, so with $7,409 secured through June 2017, I've earned $4,897 in options income. This is 58.4% of my options income goal for 2017 of $8,400.

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!