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:

#093

2017-07-18

:

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):

#114

2017-10-20

:

1

×

D 20 Apr 2018 $80.00 C

$    253.00

( $     -0.35 )

#072

2017-04-21

:

1

×

D 20 Oct 2017 $77.50 C

$    323.00

( $ -220.69 )

→ #114

#116

2017-10-20

:

2

×

INTC 17 Jan 2020 $40.00 C

$ 1,032.00

( $     -1.01 )

#089

2017-06-21

:

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 share Discount at Strike Price :  4.43% Strike Price :  $95.00 per share Number of Contracts : 1 Number of Shares : 100 Put Premium :  $1.45 per share Options Income :  $145.00 Commission :  -$0.80 Net Premium :  $1.458 per share Net Options Income :  $145.80 Options Yield :  1.47% Annualized Options Yield :  9.57% ----------------------------   --------------------- -------------------------------   ----------- Commission if Exercised :  $0.00 Cost Basis if Exercised :  $93.54 Discount 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:

#113

2017-09-27

:

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 

ID	DATE	:	NO	×	TICKER OPTION	INCOME	( EXPENSES )	ROLLED	TOTAL	➤ SECURED
#116	2017-10-20	:	1	×	INTC 17 Jan 2020 $40.00 C	$ 1,032.00	( $        -1.01 )		$ 19,127.87	➤ $ 9,639.87
#115	2017-10-20	:	1	×	DIS 15 Dec 2017 $95.00 P	$    145.00	( $        -0.80 )		$ 18,096.88	➤ $ 9,640.88
#114	2017-10-20	:	1	×	D 20 Oct 2017 $80.00 C	$    253.00	( $        -0.35 )		$ 17,952.68	➤ $ 9,641.68
#113	2017-09-27	:	2	×	VLO 17 Nov 2017 $70.00 P	$    162.00	( $        -0.99 )		$ 17,700.03	➤ $ 9,642.03
#112	2017-09-14	:	1	×	WFC 19 Jan 2018 $50.00 P	$    166.00	( $        -1.59 )		$ 17,539.02	➤ $ 9,643.02
#111	2017-09-14	:	2	×	AAPL 15 Dec 2017 $135.00 P	$    203.00	( $        -0.99 )		$ 17,374.61	➤ $ 9,644.61
#110	2017-08-30	:	2	×	WMT 15 Dec 2017 $75.00 P	$    314.00	( $        -2.57 )		$ 17,172.60	➤ $ 9,645.60
#109	2017-08-30	:	2	×	WFC 19 Jan 2018 $50.00 P	$    364.00	( $        -1.30 )		$ 16,861.17	➤ $ 9,648.17
#108	2017-08-30	:	2	×	TGT 19 Jan 2018 $50.00 P	$    336.00	( $        -1.59 )		$ 16,498.47	➤ $ 9,649.47
#107	2017-08-30	:	4	×	QCOM 20 Apr 2018 $60.00 C	$    524.00	( $        -1.99 )		$ 16,164.06	➤ $ 9,651.06
#106	2017-08-30	:	2	×	GILD 15 Feb 2018 $80.00 C	$    923.00	( $        -1.91 )		$ 15,642.05	➤ $ 9,653.05
#105	2017-08-30	:	20	×	F 16 Mar 2018 $12.00 C	$    480.00	( $      -25.68 )		$ 14,720.96	➤ $ 9,654.96
#104	2017-08-30	:	3	×	CSCO 16 Feb 2018 $34.00 C	$    182.00	( $        -2.38 )		$ 14,266.64	➤ $ 9,680.64
#103	2017-08-30	:	2	×	ABBV 15 Jun 2018 $70.00 C	$ 1,373.00	( $        -1.32 )		$ 14,087.02	➤ $ 9,683.02
#102	2017-08-18	:	2	×	HRL 15 Dec 2017 $32.50 P	$    200.00	( $        -0.11 )		$ 12,715.34	➤ $ 9,684.34
#101	2017-07-18	:	3	×	PFE 15 Dec 2017 $34.00 C	$    210.00	( $        -2.39 )		$ 12,515.45	➤ $ 9,684.45
#100	2017-07-18	:	2	×	LOW 19 Jan 2018 $75.00 P	$    830.00	( $        -2.59 )		$ 12,307.84	➤ $ 9,686.84
#099	2017-07-18	:	3	×	GE 18 Jun 2018 $30.00 C	$    153.00	( $        -2.09 )		$ 11,480.43	➤ $ 9,689.43
#098	2017-07-18	:	3	×	NKE 19 Jan 2018 $50.00 P	$    301.00	( $        -3.85 )		$ 11,329.52	➤ $ 9,691.52
#097	2017-07-18	:	3	×	WFC 15 Sep 2017 $52.50 P	$    222.00	( $    -364.44 )	→ #112	$ 11,032.37	➤ $ 9,695.37
#096	2017-07-18	:	2	×	WBA 25 Aug 2017 $75.00 P	$    130.00	( $        -0.99 )		$ 11,174.81	➤ $ 9,837.81
#095	2017-07-18	:	1	×	TXN 20 Oct 2017 $75.00 P	$    134.00	( $        -6.89 )		$ 11,045.80	➤ $ 9,708.80
#094	2017-07-18	:	2	×	SBUX 19 Jan 2018 $52.50 P	$    246.00	( $        -1.00 )		$ 10,918.69	➤ $ 9,581.69
#093	2017-07-18	:	1	×	DIS 20 Oct 2017 $97.50 P	$    105.00	( $        -0.80 )		$ 10,673.69	➤ $ 9,582.69
#092	2017-07-18	:	1	×	AAPL 20 Oct 2018 $130.00 P	$    114.00	( $        -8.04 )		$ 10,569.49	➤ $ 9,478.49
#091	2017-07-01	:	3	×	GE 15 Sep 2017 $33.00 C	$      98.50	( $        -4.97 )	→ #099	$ 10,463.53	➤ $ 9,372.53
#090	2017-06-21	:	2	×	TGT 19 Jan 2018 $65.00 C	$      76.00	( $        -1.97 )		$ 10,370.00	➤ $ 9,279.00
#089	2017-06-21	:	2	×	INTC 20 Oct 2017 $36.00 C	$    152.00	( $    -853.97 )	→ #116	$ 10,295.97	➤ $ 9,280.97
#088	2017-06-21	:	20	×	F 15 Sep 2017 $12.00 C	$    220.00	( $      -62.44 )	→ #105	$ 10,997.94	➤ $ 9,982.94
#087	2017-06-21	:	5	×	BAC 18 Aug 2017 $22.00 P	$    190.00	( $        -6.48 )		$ 10,840.38	➤ $ 9,825.38
#086	2017-06-16	:	2	×	WMT 15 Sep 2017 $70.00 P	$    246.00	( $        -9.16 )	→ #110	$ 10,656.86	➤ $ 9,641.86
#085	2017-06-16	:	1	×	VLO 15 Dec 2017 $70.00 C	$    230.00	( $        -0.80 )		$ 10,420.02	➤ $ 9,405.02
#084	2017-06-16	:	2	×	TGT 20 Oct 2017 $45.00 P	$    248.00	( $      -22.58 )	→ #108	$ 10,190.82	➤ $ 9,405.82
#083	2017-06-16	:	3	×	PPL 20 Oct 2017 $37.00 P	$    147.00	( $      -32.48 )		$ 9,965.40	➤ $ 9,180.40
#082	2017-06-16	:	1	×	CVS 18 Aug 2017 $75.00 P	$    222.00	( $        -0.80 )		$ 9,850.88	➤ $ 9,065.88
#081	2017-06-16	:	2	×	AXP 21 Jul 2017 $80.00 P	$    266.00	( $        -1.00 )		$ 9,629.68	➤ $ 8,844.68
#080	2017-05-12	:	1	×	OC 18 Aug 2017 $60.00 P	$    210.00	( $        -1.95 )		$ 9,364.68	➤ $ 8,579.68
#079	2017-05-12	:	2	×	KO 19 Jan 2018 $45.00 C	$    200.00	( $        -3.13 )		$ 9,156.63	➤ $ 8,371.63
#078	2017-05-12	:	2	×	DIS 15 Dec 2017 $110.00 C	$ 1,090.00	( $      -83.99 )		$ 8,959.76	➤ $ 8,374.76
#077	2017-05-12	:	2	×	ABBV 15 Sep 2017 $67.50 C	$    408.00	( $ -1,295.88 )	→ #103	$ 7,953.75	➤ $ 7,368.75
#076	2017-04-21	:	2	×	LOW 21 Jul 2017 $80.00 P	$    408.00	( $    -743.57 )	→ #100	$ 8,841.63	➤ $ 8,256.63
#075	2017-04-21	:	3	×	INTC 16 Jun 2017 $35.00 P	$    189.00	( $        -3.86 )		$ 9,177.20	➤ $ 8,592.20
#074	2017-04-21	:	2	×	GILD 15 Sep 2017 $75.00 C	$    210.00	( $    -949.47 )	→ #106	$ 8,992.06	➤ $ 8,407.06
#073	2017-04-21	:	20	×	F 16 Jun 2017 $12.00 C	$    320.00	( $        -9.11 )		$ 9,731.53	➤ $ 9,146.53
#072	2017-04-21	:	1	×	D 20 Oct 2017 $77.50 C	$    323.00	( $    -220.69 )	→ #114	$ 9,420.64	➤ $ 8,835.64
#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

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!