Friday, November 3, 2017

Options Update: October 2017

While DivGro is focused on investing in dividend growth stocks, I added options trading to the mix in June 2016. My goal is to generate options income and to use the money so collected to buy more dividend growth stocks.

I sell covered calls on dividend stocks I own or secured puts on stocks I would like to own. I write monthly options update articles to keep track of these 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 October 2017, I've collected options income totaling $19,128.

In 2017, I'm aiming to earn at least $8,400 in options income. I count secured options income, which is options income without associated obligations. In October, I lost some ground as I had to roll forward a couple of options that were deep in the money. I'll need to secure $1,272 in the next two months to achieve my 2017 goal...

Below is a snapshot showing the trades I executed in October. You can see all my options trades on a new options page that automatically updates whenever I enter new trades.


One option expired and I sold a new put option to replace the one that expired. Additionally, I rolled forward two call options.

Assigned Options


No options were assigned in October.

Expired Options


In October, one short option expired:

#0932017-07-18:1×DIS 20 Oct 2017 $97.50 P $    105.00 ( $ -0.80 )

On options expiration day, Disney (DIS) closed at $99.40, well above the put option's strike price of $97.50. I no longer have the obligation to buy 100 DIS shares at $97.50 per share.

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 October. 

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 October, I rolled forward two call options, one on Dominion Energy (D) and one on Intel (INTC):

#1142017-10-20:1×D 20 Apr 2018 $80.00 C $    253.00 ( $     -0.35 )
#0722017-04-21:1×D 20 Oct 2017 $77.50 C $    323.00 ( $ -220.69 )→ #114

#1162017-10-20:2×INTC 17 Jan 2020 $40.00 C $ 1,032.00 ( $     -1.01 )
#0892017-06-21:2×INTC 20 Oct 2017 $36.00 C $    152.00 ( $ -853.97 )→ #116

I needed to roll forward these call options to avoid assignment. Both stocks have moved substantially higher, especially INTC. For both options, I increased the strike prices and, in the case of INTC, I chose to sell a LEAP (Long Term Equity Anticipation Security).

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 one put contract in this period:

#115 : 2017-10-20: Sold to Open 1 Contract of Option DIS Dec 15 2017 95.00 P

I'm willing to buy 100 shares of DIS for $95.00 per share on or before 15 December. DIS closed at $99.40 per share on the date of my trade:

Open Date :  2017-10-20
Expiration Date :  2017-12-15    Number of Days in Trade : 56
Price at Close :  $99.40 per shareDiscount at Strike Price : 4.43%
Strike Price :  $95.00 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.45 per shareOptions Income : $145.00
Commission : -$0.80
Net Premium :  $1.458 per shareNet Options Income : $145.80
Options Yield :  1.47%Annualized Options Yield : 9.57%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $93.54Discount if Exercised : 5.89%

This put option trade yields 1.47%, or 9.57% on an annualized basis. At $99.40 per share, DIS yields 1.57%, so I'm boosting dividend income by a factor of 6.10. If the option is exercised, I'll buy 100 shares at a cost basis of $93.54 per share, a discount of 5.89%.


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 boost factor of 6.10, this trade easily tops my desired dividend boost factor. 

Options Expiring Next Month


The following option expires in November:

#1132017-09-27:2×VLO 17 Nov 2017 $70.00 P
:: VLO is trading above $81.50 (16% safety margin)

With a large safety margin, I expect the option to expire.

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 


IDDATE:NO×TICKER OPTIONINCOME( EXPENSES )ROLLEDTOTAL➤ SECURED
#1162017-10-20:  1×INTC 17 Jan 2020 $40.00 C $ 1,032.00 ( $        -1.01 )$ 19,127.87 ➤ $ 9,639.87 
#1152017-10-20:  1×DIS 15 Dec 2017 $95.00 P $    145.00 ( $        -0.80 )$ 18,096.88 ➤ $ 9,640.88 
#1142017-10-20:  1×D 20 Oct 2017 $80.00 C $    253.00 ( $        -0.35 )$ 17,952.68 ➤ $ 9,641.68 
#1132017-09-27:  2×VLO 17 Nov 2017 $70.00 P $    162.00 ( $        -0.99 )$ 17,700.03 ➤ $ 9,642.03 
#1122017-09-14:  1×WFC 19 Jan 2018 $50.00 P $    166.00 ( $        -1.59 )$ 17,539.02 ➤ $ 9,643.02 
#1112017-09-14:  2×AAPL 15 Dec 2017 $135.00 P $    203.00 ( $        -0.99 )$ 17,374.61 ➤ $ 9,644.61 
#1102017-08-30:  2×WMT 15 Dec 2017 $75.00 P $    314.00 ( $        -2.57 )$ 17,172.60 ➤ $ 9,645.60 
#1092017-08-30:  2×WFC 19 Jan 2018 $50.00 P $    364.00 ( $        -1.30 )$ 16,861.17 ➤ $ 9,648.17 
#1082017-08-30:  2×TGT 19 Jan 2018 $50.00 P $    336.00 ( $        -1.59 )$ 16,498.47 ➤ $ 9,649.47 
#1072017-08-30:  4×QCOM 20 Apr 2018 $60.00 C $    524.00 ( $        -1.99 )$ 16,164.06 ➤ $ 9,651.06 
#1062017-08-30:  2×GILD 15 Feb 2018 $80.00 C $    923.00 ( $        -1.91 )$ 15,642.05 ➤ $ 9,653.05 
#1052017-08-30:20×F 16 Mar 2018 $12.00 C $    480.00 ( $      -25.68 )$ 14,720.96 ➤ $ 9,654.96 
#1042017-08-30:  3×CSCO 16 Feb 2018 $34.00 C $    182.00 ( $        -2.38 )$ 14,266.64 ➤ $ 9,680.64 
#1032017-08-30:  2×ABBV 15 Jun 2018 $70.00 C $ 1,373.00 ( $        -1.32 )$ 14,087.02 ➤ $ 9,683.02 
#1022017-08-18:  2×HRL 15 Dec 2017 $32.50 P $    200.00 ( $        -0.11 )$ 12,715.34 ➤ $ 9,684.34 
#1012017-07-18:  3×PFE 15 Dec 2017 $34.00 C $    210.00 ( $        -2.39 )$ 12,515.45 ➤ $ 9,684.45 
#1002017-07-18:  2×LOW 19 Jan 2018 $75.00 P $    830.00 ( $        -2.59 )$ 12,307.84 ➤ $ 9,686.84 
#0992017-07-18:  3×GE 18 Jun 2018 $30.00 C $    153.00 ( $        -2.09 )$ 11,480.43 ➤ $ 9,689.43 
#0982017-07-18:  3×NKE 19 Jan 2018 $50.00 P $    301.00 ( $        -3.85 )$ 11,329.52 ➤ $ 9,691.52 
#0972017-07-18:  3×WFC 15 Sep 2017 $52.50 P $    222.00 ( $    -364.44 )→ #112$ 11,032.37 ➤ $ 9,695.37 
#0962017-07-18:  2×WBA 25 Aug 2017 $75.00 P $    130.00 ( $        -0.99 )$ 11,174.81 ➤ $ 9,837.81 
#0952017-07-18:  1×TXN 20 Oct 2017 $75.00 P $    134.00 ( $        -6.89 )$ 11,045.80 ➤ $ 9,708.80 
#0942017-07-18:  2×SBUX 19 Jan 2018 $52.50 P $    246.00 ( $        -1.00 )$ 10,918.69 ➤ $ 9,581.69 
#0932017-07-18:  1×DIS 20 Oct 2017 $97.50 P $    105.00 ( $        -0.80 )$ 10,673.69 ➤ $ 9,582.69 
#0922017-07-18:  1×AAPL 20 Oct 2018 $130.00 P $    114.00 ( $        -8.04 )$ 10,569.49 ➤ $ 9,478.49 
#0912017-07-01:  3×GE 15 Sep 2017 $33.00 C $      98.50 ( $        -4.97 )→ #099$ 10,463.53 ➤ $ 9,372.53 
#0902017-06-21:  2×TGT 19 Jan 2018 $65.00 C $      76.00 ( $        -1.97 )$ 10,370.00 ➤ $ 9,279.00 
#0892017-06-21:  2×INTC 20 Oct 2017 $36.00 C $    152.00 ( $    -853.97 )→ #116$ 10,295.97 ➤ $ 9,280.97 
#0882017-06-21:20×F 15 Sep 2017 $12.00 C $    220.00 ( $      -62.44 )→ #105$ 10,997.94 ➤ $ 9,982.94 
#0872017-06-21:  5×BAC 18 Aug 2017 $22.00 P $    190.00 ( $        -6.48 )$ 10,840.38 ➤ $ 9,825.38 
#0862017-06-16:  2×WMT 15 Sep 2017 $70.00 P $    246.00 ( $        -9.16 )→ #110$ 10,656.86 ➤ $ 9,641.86 
#0852017-06-16:  1×VLO 15 Dec 2017 $70.00 C $    230.00 ( $        -0.80 )$ 10,420.02 ➤ $ 9,405.02 
#0842017-06-16:  2×TGT 20 Oct 2017 $45.00 P $    248.00 ( $      -22.58 )→ #108$ 10,190.82 ➤ $ 9,405.82 
#0832017-06-16:  3×PPL 20 Oct 2017 $37.00 P $    147.00 ( $      -32.48 )$ 9,965.40 ➤ $ 9,180.40 
#0822017-06-16:  1×CVS 18 Aug 2017 $75.00 P $    222.00 ( $        -0.80 )$ 9,850.88 ➤ $ 9,065.88 
#0812017-06-16:  2×AXP 21 Jul 2017 $80.00 P $    266.00 ( $        -1.00 )$ 9,629.68 ➤ $ 8,844.68 
#0802017-05-12:  1×OC 18 Aug 2017 $60.00 P $    210.00 ( $        -1.95 )$ 9,364.68 ➤ $ 8,579.68 
#0792017-05-12:  2×KO 19 Jan 2018 $45.00 C $    200.00 ( $        -3.13 )$ 9,156.63 ➤ $ 8,371.63 
#0782017-05-12:  2×DIS 15 Dec 2017 $110.00 C $ 1,090.00 ( $      -83.99 )$ 8,959.76 ➤ $ 8,374.76 
#0772017-05-12:  2×ABBV 15 Sep 2017 $67.50 C $    408.00 ( $ -1,295.88 )→ #103$ 7,953.75 ➤ $ 7,368.75 
#0762017-04-21:  2×LOW 21 Jul 2017 $80.00 P $    408.00 ( $    -743.57 )→ #100$ 8,841.63 ➤ $ 8,256.63 
#0752017-04-21:  3×INTC 16 Jun 2017 $35.00 P $    189.00 ( $        -3.86 )$ 9,177.20 ➤ $ 8,592.20 
#0742017-04-21:  2×GILD 15 Sep 2017 $75.00 C $    210.00 ( $    -949.47 )→ #106$ 8,992.06 ➤ $ 8,407.06 
#0732017-04-21:20×F 16 Jun 2017 $12.00 C $    320.00 ( $        -9.11 )$ 9,731.53 ➤ $ 9,146.53 
#0722017-04-21:  1×D 20 Oct 2017 $77.50 C $    323.00 ( $    -220.69 )→ #114$ 9,420.64 ➤ $ 8,835.64 
#0712017-04-21:  5×BAC 21 Jul 2017 $20.00 P $    160.00 ( $        -2.28 )$ 9,318.33 ➤ $ 8,733.33 
#0702017-04-04:  1×XOM 19 May 2017 $80.00 P $    116.00 ( $        -1.00 )$ 9,160.61 ➤ $ 8,575.61 
#0692017-04-04:  2×INTC 19 May 2017 $36.00 P $    192.00 ( $        -0.99 )$ 9,045.61 ➤ $ 8,460.61 
#0682017-04-04:  2×CSCO 18 Aug 2017 $31.00 P $    146.00 ( $        -0.99 )$ 8,854.60 ➤ $ 8,269.60 
#0672017-04-03:  1×HRL 15 Sep 2017 $37.50 C $      84.00 ( $        -1.10 )$ 8,709.59 ➤ $ 8,124.59 
#0662017-04-03:  1×CSCO 20 Oct 2017 $33.00 C $    189.00 ( $      -19.68 )$ 8,626.69 ➤ $ 8,041.69 
#0652017-03-20:  1×WBA 21 Apr 2017 $84.00 P $    184.00 ( $        -1.10 )$ 8,457.37 ➤ $ 7,872.37 
#0642017-03-17:  1×TGT 19 Jan 2018 $65.00 C $      93.00 ( $        -1.10 )$ 8,274.47 ➤ $ 7,689.47 
#0632017-03-17:  1×PG 15 Dec 2017 $90.00 C $    492.00 ( $        -1.11 )$ 8,182.57 ➤ $ 7,690.57 
#0622017-03-17:  2×PFE 15 Sep 2017 $35.00 C $    220.00 ( $      -22.57 )→ #101$ 7,691.68 ➤ $ 7,691.68 
#0612017-02-24:  1×TGT 20 Oct 2017 $75.00 C $    157.00 ( $        -5.68 )→ #064$ 7,494.25 ➤ $ 7,494.25 

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:
$ 19,128$   9,640
Last Month:
$ 18,773$ 10,135
Difference:
$      355$     -495

I started 2017 with $2,512 in secured options income, so with $9,640 secured through October 2017, I've earned $7,128 in options income. This is 84.9% 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!

4 comments :

  1. Wow DivGro. I'm so impressed with the way you have crushed options. What a first year. I'm excited to see what you'll do next year. Best of luck.

    ReplyDelete
    Replies
    1. Why, thank you, Investment Hunting! I'm happy with the income generated from options trading. Hopefully, I can find similar success next year. We'll see how it goes!

      Delete
  2. I've hit the options premium crossover point where my options trading covers my annual budget. It is a great source of comfort that I can support myself this way. Gogogogogo DivGro!

    ReplyDelete
    Replies
    1. That's fantastic! I'm still very far from the crossover point, but it is good to hear when others reach that point. Congratulations!

      Delete

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