Options Update: September 2017

In June 2016, I started trading options for income by leveraging DivGro, my dividend growth portfolio. I sell covered calls and secured puts on dividend stocks I own or would like to own. The options income I collect flows back into DivGro, just like dividends. It provides extra cash to buy more dividend growth stocks.

I write monthly options update articles to keep track of my options trades. Each update serves as a status report on the open options and the obligations I have. I also report on new trades and I provide a running tally of DivGro's options income to date.

Through September 2017, I've collected options income totaling $18,773. Of that total, $10,135 is secured, meaning I no longer have any obligations to fulfill. That represents extra money I can use to buy dividend growth stocks.

In 2017, I'm aiming to earn at least $8,400 in options income. This month's secured income of $1,318 pushed me ever closer to my 2017 goal. With options income in 2017 totaling $7,623, I'm only $777 short of my 2017 goal!

Last month, I created a new spreadsheet to track my options trades. I also added a new options page to my DivGro blog that automatically updates whenever I enter new trades. Additionally, the spreadsheet automatically updates my options income tally and secured income totals:


The snapshot above shows the trades executed in September.

One option expired and I closed four options early. Additionally, I rolled forward one option and I sold two put options for income.

Assigned Options

No options were assigned in September.

Expired Options

In September, one short option expired:

#067

2017-04-03

:

1

×

HRL 15 Sep 2017 $37.50 C

$ 84.00

( $ -1.10 )

On options expiration day, Hormel Foods (HRL) closed at $31.38, well below the covered call strike price of $37.50. The 100 shares of HRL in DivGro is now "uncovered", so I can sell another covered call for income.

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.

In September, I closed three put options and one call option early:

#095	2017-07-18	:	1	×	TXN 20 Oct 2017 $75.00 P	$    134.00	( $   -6.89 )	→ secured 95% of available income
#092	2017-07-18	:	1	×	AAPL 20 Oct 2018 $130.00 P	$    114.00	( $   -8.04 )	→ secured 93% of available income
#083	2017-06-16	:	3	×	PPL 20 Oct 2017 $37.00 P	$    147.00	( $ -32.48 )	→ secured 80% of available income
#078	2017-05-12	:	2	×	DIS 15 Dec 2017 $110.00 C	$ 1,090.00	( $ -83.99 )	→ secured 92% of available income

The cost of buying back the put options is shown in parentheses.

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.

In September, I rolled forward an option on Wells Fargo (WFC):

#097	2017-07-18	:	3	×	WFC 15 Sep 2017 $52.50 P	$ 222.00	( $ -364.44 )	→ #109
#112	2017-09-14	:	1	×	WFC 19 Jan 2018 $50.00 P	$ 166.00	( $     -2.89 )

I decided to roll forward the WFC put option to January 2018 and also to drop the strike price to $50.

New Covered Calls

Selling covered calls is a way to collect extra income on stocks you already own. I did not sell any covered calls in September.

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 two put contracts in this period:

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#111 : 2017-09-14: Sold to Open 2 Contracts of Option AAPL Dec 15 2017 135.00 P

I'm willing to buy 200 shares of Apple (AAPL) for $135.00 per share on or before 15 December. AAPL closed at $158.28 per share on the date of my trade:

Open Date :  2017-09-14 Expiration Date :  2017-12-15     Number of Days in Trade :  92 Price at Close :  $158.28 per share Discount at Strike Price :  14.71% Strike Price :  $135.00 per share Number of Contracts : 2 Number of Shares : 200 Put Premium :  $1.02 per share Options Income :  $203.00 Commission :  -$0.99 Net Premium :  $1.020 per share Net Options Income :  $203.99 Options Yield :  0.64% Annualized Options Yield :  2.56% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $133.98 Discount if Exercised :  15.35%

This put option trade yields 0.64%, or 2.56% on an annualized basis. At $158.28 per share, AAPL yields 1.59%, so I'm boosting dividend income by a factor of 1.61. If the options are exercised, I'll buy 200 shares at a cost basis of $133.98 per share, a discount of 15.35%.

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#113 : 2017-09-27: Sold to Open 2 Contracts of Option VLO Nov 17 2017 70.00 P

I'm willing to buy 200 shares of Valero Energy (VLO) for $70.00 per share on or before 17 November. VLO closed at $75.47 per share on the date of my trade:

Open Date :  2017-09-27 Expiration Date :  2017-11-17     Number of Days in Trade :  51 Price at Close :  $75.47 per share Discount at Strike Price :  7.25% Strike Price :  $70.00 per share Number of Contracts : 2 Number of Shares : 200 Put Premium :  $0.81 per share Options Income :  $162.00 Commission :  -$0.99 Net Premium :  $0.815 per share Net Options Income :  $162.99 Options Yield :  1.08% Annualized Options Yield :  7.73% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $69.19 Discount if Exercised :  8.33%

This put option trade yields 1.08%, or 7.73% on an annualized basis. At $75.47 per share, VLO yields 3.71%, so I'm boosting dividend income by a factor of 2.08. If the options are exercised, I'll buy 200 shares at a cost basis of $69.19 per share, a discount of 8.33%.

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For selling puts 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%. With a discounts of 15.35% and 8.33%, these trades are reasonably what I hope to achieve.

Options Expiring Next Month

The following options expire in October, so I'll be monitoring them closely:

#093	2017-07-18	:	1	×	DIS 20 Oct 2017 $97.50 P	:: Closed at $98.57 on 29 Sep (1% safety margin)
#089	2017-06-21	:	2	×	INTC 20 Oct 2017 $36.00 C	:: Closed at $38.08 on 29 Sep (6% in the money)
#072	2017-04-21	:	1	×	D 20 Oct 2017 $77.50 C	:: Closed at $76.93 on 30 Sep (1% safety margin)

Intel (INTC) is trading well above the $36.00 strike price, so I'll need to roll forward the options to avoid assignment.

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
#113	2017-09-27	:	2	×	VLO 17 Nov 2017 $70.00 P	$    162.00	( $        -0.99 )		$ 18,773.35	➤ $ 10,135.35
#112	2017-09-14	:	1	×	WFC 19 Jan 2018 $50.00 P	$    166.00	( $        -1.59 )		$ 18,612.34	➤ $ 10,136.34
#111	2017-09-14	:	2	×	AAPL 15 Dec 2017 $135.00 P	$    203.00	( $        -0.99 )		$ 18,447.93	➤ $ 10,137.93
#110	2017-08-30	:	2	×	WMT 15 Dec 2017 $75.00 P	$    314.00	( $        -2.57 )		$ 18,245.92	➤ $ 10,138.92
#109	2017-08-30	:	2	×	WFC 19 Jan 2018 $50.00 P	$    364.00	( $        -1.30 )		$ 17,934.49	➤ $ 10,141.49
#108	2017-08-30	:	2	×	TGT 19 Jan 2018 $50.00 P	$    336.00	( $        -1.59 )		$ 17,571.79	➤ $ 10,142.79
#107	2017-08-30	:	4	×	QCOM 20 Apr 2018 $60.00 C	$    524.00	( $        -1.99 )		$ 17,237.38	➤ $ 10,144.38
#106	2017-08-30	:	2	×	GILD 15 Feb 2018 $80.00 C	$    923.00	( $        -1.91 )		$ 16,715.37	➤ $ 10,146.37
#105	2017-08-30	:	20	×	F 16 Mar 2018 $12.00 C	$    480.00	( $      -25.68 )		$ 15,794.28	➤ $ 10,148.28
#104	2017-08-30	:	3	×	CSCO 16 Feb 2018 $34.00 C	$    182.00	( $        -2.38 )		$ 15,339.96	➤ $ 10,173.96
#103	2017-08-30	:	2	×	ABBV 15 Jun 2018 $70.00 C	$ 1,373.00	( $        -1.32 )		$ 15,160.34	➤ $ 10,176.34
#102	2017-08-18	:	2	×	HRL 15 Dec 2017 $32.50 P	$    200.00	( $        -0.11 )		$ 13,788.66	➤ $ 10,177.66
#101	2017-07-18	:	3	×	PFE 15 Dec 2017 $34.00 C	$    210.00	( $        -2.39 )		$ 13,588.77	➤ $ 10,177.77
#100	2017-07-18	:	2	×	LOW 19 Jan 2018 $75.00 P	$    830.00	( $        -2.59 )		$ 13,381.16	➤ $ 10,180.16
#099	2017-07-18	:	3	×	GE 18 Jun 2018 $30.00 C	$    153.00	( $        -2.09 )		$ 12,553.75	➤ $ 10,182.75
#098	2017-07-18	:	3	×	NKE 19 Jan 2018 $50.00 P	$    301.00	( $        -3.85 )		$ 12,402.84	➤ $ 10,184.84
#097	2017-07-18	:	3	×	WFC 15 Sep 2017 $52.50 P	$    222.00	( $    -364.44 )	→ #109	$ 12,105.69	➤ $ 10,188.69
#096	2017-07-18	:	2	×	WBA 25 Aug 2017 $75.00 P	$    130.00	( $        -0.99 )		$ 12,248.13	➤ $ 10,331.13
#095	2017-07-18	:	1	×	TXN 20 Oct 2017 $75.00 P	$    134.00	( $        -6.89 )		$ 12,119.12	➤ $ 10,202.12
#094	2017-07-18	:	2	×	SBUX 19 Jan 2018 $52.50 P	$    246.00	( $        -1.00 )		$ 11,992.01	➤ $ 10,075.01
#093	2017-07-18	:	1	×	DIS 20 Oct 2017 $97.50 P	$    105.00	( $        -0.80 )		$ 11,747.01	➤ $ 10,076.01
#092	2017-07-18	:	1	×	AAPL 20 Oct 2018 $130.00 P	$    114.00	( $        -8.04 )		$ 11,642.81	➤ $ 10,076.81
#091	2017-07-01	:	3	×	GE 15 Sep 2017 $33.00 C	$      98.50	( $        -4.97 )	→ #099	$ 11,536.85	➤ $ 9,970.85
#090	2017-06-21	:	2	×	TGT 19 Jan 2018 $65.00 C	$      76.00	( $        -1.97 )		$ 11,443.32	➤ $ 9,877.32
#089	2017-06-21	:	2	×	INTC 20 Oct 2017 $36.00 C	$    152.00	( $        -0.99 )		$ 11,369.29	➤ $ 9,879.29
#088	2017-06-21	:	20	×	F 15 Sep 2017 $12.00 C	$    220.00	( $      -62.44 )	→ #105	$ 11,218.28	➤ $ 9,880.28
#087	2017-06-21	:	5	×	BAC 18 Aug 2017 $22.00 P	$    190.00	( $        -6.48 )		$ 11,060.72	➤ $ 9,722.72
#086	2017-06-16	:	2	×	WMT 15 Sep 2017 $70.00 P	$    246.00	( $        -9.16 )	→ #110	$ 10,877.20	➤ $ 9,539.20
#085	2017-06-16	:	1	×	VLO 15 Dec 2017 $70.00 C	$    230.00	( $        -0.80 )		$ 10,640.36	➤ $ 9,302.36
#084	2017-06-16	:	2	×	TGT 20 Oct 2017 $45.00 P	$    248.00	( $      -22.58 )	→ #108	$ 10,411.16	➤ $ 9,303.16
#083	2017-06-16	:	3	×	PPL 20 Oct 2017 $37.00 P	$    147.00	( $      -32.48 )		$ 10,185.74	➤ $ 9,077.74
#082	2017-06-16	:	1	×	CVS 18 Aug 2017 $75.00 P	$    222.00	( $        -0.80 )		$ 10,071.22	➤ $ 8,963.22
#081	2017-06-16	:	2	×	AXP 21 Jul 2017 $80.00 P	$    266.00	( $        -1.00 )		$ 9,850.02	➤ $ 8,742.02
#080	2017-05-12	:	1	×	OC 18 Aug 2017 $60.00 P	$    210.00	( $        -1.95 )		$ 9,585.02	➤ $ 8,477.02
#079	2017-05-12	:	2	×	KO 19 Jan 2018 $45.00 C	$    200.00	( $        -3.13 )		$ 9,376.97	➤ $ 8,268.97
#078	2017-05-12	:	2	×	DIS 15 Dec 2017 $110.00 C	$ 1,090.00	( $      -83.99 )		$ 9,180.10	➤ $ 8,272.10
#077	2017-05-12	:	2	×	ABBV 15 Sep 2017 $67.50 C	$    408.00	( $ -1,295.88 )	→ #103	$ 8,174.09	➤ $ 7,266.09
#076	2017-04-21	:	2	×	LOW 21 Jul 2017 $80.00 P	$    408.00	( $    -743.57 )	→ #100	$ 9,061.97	➤ $ 8,153.97
#075	2017-04-21	:	3	×	INTC 16 Jun 2017 $35.00 P	$    189.00	( $        -3.86 )		$ 9,397.54	➤ $ 8,489.54
#074	2017-04-21	:	2	×	GILD 15 Sep 2017 $75.00 C	$    210.00	( $    -949.47 )	→ #106	$ 9,212.40	➤ $ 8,304.40
#073	2017-04-21	:	20	×	F 16 Jun 2017 $12.00 C	$    320.00	( $        -9.11 )		$ 9,951.87	➤ $ 9,043.87
#072	2017-04-21	:	1	×	D 20 Oct 2017 $77.50 C	$    323.00	( $        -0.35 )		$ 9,640.98	➤ $ 8,732.98
#071	2017-04-21	:	5	×	BAC 21 Jul 2017 $20.00 P	$    160.00	( $        -2.28 )		$ 9,318.33	➤ $ 8,733.33
#070	2017-04-04	:	1	×	XOM 19 May 2017 $80.00 P	$    116.00	( $        -1.00 )		$ 9,160.61	➤ $ 8,575.61
#069	2017-04-04	:	2	×	INTC 19 May 2017 $36.00 P	$    192.00	( $        -0.99 )		$ 9,045.61	➤ $ 8,460.61
#068	2017-04-04	:	2	×	CSCO 18 Aug 2017 $31.00 P	$    146.00	( $        -0.99 )		$ 8,854.60	➤ $ 8,269.60
#067	2017-04-03	:	1	×	HRL 15 Sep 2017 $37.50 C	$      84.00	( $        -1.10 )		$ 8,709.59	➤ $ 8,124.59
#066	2017-04-03	:	1	×	CSCO 20 Oct 2017 $33.00 C	$    189.00	( $      -19.68 )		$ 8,626.69	➤ $ 8,041.69
#065	2017-03-20	:	1	×	WBA 21 Apr 2017 $84.00 P	$    184.00	( $        -1.10 )		$ 8,457.37	➤ $ 7,872.37
#064	2017-03-17	:	1	×	TGT 19 Jan 2018 $65.00 C	$      93.00	( $        -1.10 )		$ 8,274.47	➤ $ 7,689.47
#063	2017-03-17	:	1	×	PG 15 Dec 2017 $90.00 C	$    492.00	( $        -1.11 )		$ 8,182.57	➤ $ 7,690.57
#062	2017-03-17	:	2	×	PFE 15 Sep 2017 $35.00 C	$    220.00	( $      -22.57 )	→ #101	$ 7,691.68	➤ $ 7,691.68
#061	2017-02-24	:	1	×	TGT 20 Oct 2017 $75.00 C	$    157.00	( $        -5.68 )	→ #064	$ 7,494.25	➤ $ 7,494.25
#060	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    580.00	( $    -123.57 )		$ 7,342.93	➤ $ 7,342.93
#059	2017-02-24	:	2	×	QCOM 21 Jul 2017 $57.50 C	$    573.00	( $    -123.07 )		$ 6,886.50	➤ $ 6,886.50
#058	2017-02-24	:	1	×	PFE 15 Sep 2017 $35.00 C	$    113.00	( $      -12.09 )	→ #101	$ 6,436.57	➤ $ 6,436.57
#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 count secured options income, which is income from options with no further obligations.

	Total Options Income		Secured Options Income
This Month:	$ 18,773		$ 10,135
Last Month:	$ 18,493		$   8,817
Difference:	$      280		$   1,318

I started 2017 with $2,512 in secured options income, so with $10,135 secured through September 2017, I've earned $7,623 in options income. This is 90.8% of my options income goal of $8,400 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!