Sunday, March 11, 2018

Options Update: February 2018

I write monthly options update articles to keep track of options trades in my DivGro portfolio. I mostly sell covered calls on dividend growth stocks I own or secured puts on stocks I would like to own. Sometimes, I execute more speculative options trades, too.

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

While DivGro remains focused on dividend growth investing, I added options trading in June 2016 to leverage the equity in my portfolio and to generate more income. In turn, this allows me to buy more dividend growth stocks and boost my dividend income.

My 2018 goals include a goal to secure at least $12,000 in options income. This is a challenging goal and represents an increase of about 43% over the amount I secured in 2017.

To make things even more challenging, I took a few steps back in January (see Part 1 and Part 2 of January's options update for details). I executed some defensive trades and a few bull put spreads that "cost" me $8,007 in previously secured options income. As a consequence, I'll have to secure $20,007 in the rest of 2018 to reach my options goal!

Unfortunately, the news for February is even worse! With the stunning recent performance of Abbvie (ABBV), my $70 June call options moved deep in the money. Then ABBV announced a 35% dividend increase and a new $10B stock repurchase program, creating further upward momentum for the stock price.


ABBV's performance has moved my $70 June call options deep in the money. This left me with a difficult choice of either "allowing" my 200 shares to be called away, or to roll forward the option at significant cost.

I decided to bite the bullet and roll forward the option to 2020, simultaneously increasing the strike price to $100. With ABBV trading near $120 per share, the new option remains deep in the money. However, I have more time (hopefully) to collect additional dividends.

The cost of rolling forward the ABBV covered call has thrown my secured options income into negative territory. I'll provide details of the trade below, but the bottom line is that secured options income dropped to -$6,602!

The following snapshot shows the trades I executed in February. You can see all my options trades on a new options page that automatically updates whenever I enter new trades.


Assigned Options


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

No options got assigned in February.

Expired Options


In February, the following short put option expired:

#1202017-11-17:-2×AAPL 16 Feb 2018 $150.00 P $       376.00 ( $          -1.60 )

Due to this expiration, I secured options income of $374.40.

On options expiration day, Apple (AAPL) closed at $172.43, about 15% above the put option's strike price of $150. I no longer have the obligation to buy 200 AAPL shares at $150 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 didn't close any options early in February. 

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 February, I rolled forward two call options and one put option:

#1422018-02-16:-2×GILD 15 Jun 2018 $85.00 C $    678.00 
( $          -1.13 )
#1072017-08-30:-2×GILD 15 Feb 2018 $80.00 C   $    923.00 ( $      -421.02 )→ #142

#1432018-02-16:-3×NKE 20 Jul 2018 $60.00 P $    441.00 
( $          -2.38 )

#1212017-11-17:-3×NKE 20 Apr 2018 $50.00 P     $    208.00 ( $        -31.15 )→ #143

#1562018-02-26:-2×ABBV 17 Jan 2020 $100.00 C $ 5,508.00 
( $          -1.24 )
#1052017-08-30:-2×ABBV 15 Jun 2018 $70.00 C $ 1,373.00 ( $ -10,102.43 )→ #156

On options expiration date (16 February), Gilead Sciences (GILD) traded close to the $80 strike price, so I decided to roll forward the options to June and simultaneously to increase the strike price to $85. In the process, I secured $501.98 in options income and added $676.87 to my options income tally.

With Nike (NKE) trading above $65, my April $50 put options were sufficiently out of the money that I felt comfortable to roll forward the options to July and to increase the strike price to $60. Doing so allowed me to secure $176.85 in options income and to add $438.62 to my options income tally.

Earlier I mentioned rolling forward my ABBV options to protect the dividend. The action cost met a whopping $8,729.43 in secured options income, though I added $5,506.76 "back" to my options income tally. Notice that the strike price of $100 is still deep in the money, which means my shares could be called away at any time. But I've decreased the likelihood of that happening for the time-being.

Let's look at this trade in more detail. By rolling forward the June 2018 $70 calls to January 2020 $100 calls, I increased my potential capital gains by $30 per share. This amounts to a total of $6,000, since 2 options control 200 shares. To close the $70 call cost me $10,102.43, but I sold the $100 call for $5,506.76, for a net cost of $4,595.67. So, while the transaction wreaked havoc in my options spreadsheet, overall I'm doing fine.

Of course, one can be cynical and say I would have been much better off if I'd never sold the ABBV call options. That's true, but hindsight is always easier than foresight and I can always point to my options income total of over $26,000 (since June 2016) as sufficient reason for continuing to trade options.

New Covered Calls


Selling covered calls is a way to collect extra income on stocks you already own.

I sold the following call contract in this period:

#1462018-02-23:-2×DIS 06 Apr 2018 $112.00 C $       142.00 ( $          -0.74 )


#146 : 2018-02-23: Sold to Open 2 Contracts of Option DIS Apr 6 2018 112.00 C

I own 200 shares of Walt Disney (DIS) at a cost basis of $99.20 per share. I'm willing to sell these shares for $112.00 on or before 6 April:

Open Date :  2018-02-23
Expiration Date :  2018-04-06    Number of Days in Trade : 42
Cost Basis :  $99.20 per shareGain at Strike Price : 12.90%
Strike Price :  $112.00 per share
Number of Contracts : 2Number of Shares :200
Call Premium :  $0.71 per shareOptions Income : $142.00
Commission : -$0.74
Net Premium :  $0.714 per shareNet Options Income : $142.74
Options Yield :  0.72%Annualized Options Yield : 6.26%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $98.49Gain if Exercised : 13.72%

This covered call yields 0.72%, or 6.26% on an annualized basis. The yield on cost of my DIS position is 1.69%, so I'm boosting dividend income by a factor of 3.69. If the options are exercised, I'll sell 200 shares of DIS at a reduced cost basis of $98.49 per share, for capital gains of 13.72%.


For covered calls, I think an achievable goal is to earn double the dividend yield. The DIS covered call easily doubles the stock's dividend yield.

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 the following put contracts in this period:

#1552018-02-26:-1×WMT 06 Apr 2018 $90.00 P $       130.00 ( $          -0.99 )
#1542018-02-26:-1×LOW 20 Apr 2018 $92.50 P $       196.00 ( $          -0.79 )
#1512018-02-23:-2×SBUX 18 May 2018 $52.50 P $       194.00 ( $          -0.98 )
#1502018-02-23:-1×PG 20 Apr 2018 $80.00 P $       171.00 ( $          -0.79 )
#1492018-02-23:-2×MO 20 Apr 2018 $60.00 P $       144.00 ( $          -1.08 )
#1482018-02-23:-2×HRL 15 Jun 2018 $32.50 P $       304.00 ( $            0.00 )
#1472018-02-23:-2×EEM 18 May 2018 $46.00 P $       156.00 ( $          -2.42 )
#1452018-02-23:-3×BAC 18 May 2018 $29.00 P $       150.00 ( $          -1.47 )
#1442018-02-23:-2×AAPL 18 May 2018 $155.00 P $       374.00 ( $          -2.43 )


#144 : 2018-02-23: Sold to Open 2 Contracts of Option AAPL May 18 2018 155.00 P

I'm willing to buy 200 shares of Apple (AAPL) for $155.00 per share on or before 18 May. AAPL closed at $175.50 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-05-18    Number of Days in Trade : 84
Price at Close :  $175.50 per shareDiscount at Strike Price : 11.68%
Strike Price :  $155.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $1.87 per shareOptions Income : $374.00
Commission : -$2.43
Net Premium :  $1.858 per shareNet Options Income : $371.57
Options Yield :  1.06%Annualized Options Yield : 4.60%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $153.12Discount if Exercised : 12.75%

This put option trade yields 1.06%, or 4.60% on an annualized basis. At $175.50 per share, AAPL yields 1.44%, so I'm boosting dividend income by a factor of 3.21. If the options are exercised, I'll buy 200 shares at a cost basis of $153.12 per share, a discount of 12.75%.



#145 : 2018-02-23: Sold to Open 3 Contracts of Option BAC May 18 2018 29.00 P

I'm willing to buy 300 shares of Bank of America (BAC) for $29.00 per share on or before 18 May. BAC closed at $31.91 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-05-18    Number of Days in Trade : 84
Price at Close :  $31.91 per shareDiscount at Strike Price : 9.12%
Strike Price :  $29.00 per share
Number of Contracts : 3Number of Shares :300
Put Premium :  $0.50 per shareOptions Income : $150.00
Commission : -$1.47
Net Premium :  $0.495 per shareNet Options Income : $148.53
Options Yield :  1.55%Annualized Options Yield : 6.75%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $28.50Discount if Exercised : 10.70%

This put option trade yields 1.55%, or 6.75% on an annualized basis. At $31.91 per share, BAC yields 1.50%, so I'm boosting dividend income by a factor of 4.49. If the options are exercised, I'll buy 300 shares at a cost basis of $28.50 per share, a discount of 10.70%.



#147 : 2018-02-23: Sold to Open 2 Contracts of Option EEM May 18 2018 46.00 P

I'm willing to buy 200 shares of iShares MSCI Emerging Markets Indx (EEM) for $46.00 per share on or before 18 May. EEM closed at $49.72 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-05-18    Number of Days in Trade : 84
Price at Close :  $49.72 per shareDiscount at Strike Price : 7.48%
Strike Price :  $46.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $0.78 per shareOptions Income : $156.00
Commission : -$2.42
Net Premium :  $0.768 per shareNet Options Income : $153.58
Options Yield :  1.54%Annualized Options Yield : 6.72%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $45.21Discount if Exercised : 9.08%

This put option trade yields 1.54%, or 6.72% on an annualized basis. At $49.72 per share, EEM yields 1.65%, so I'm boosting dividend income by a factor of 4.07. If the options are exercised, I'll buy 200 shares at a cost basis of $45.21 per share, a discount of 9.08%.



#148 : 2018-02-23: Sold to Open 2 Contracts of Option HRL Jun 15 2018 32.50 P

I'm willing to buy 200 shares of Hormel Foods (HRL) for $32.50 per share on or before 15 June. HRL closed at $32.64 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-06-15    Number of Days in Trade : 112
Price at Close :  $32.64 per shareDiscount at Strike Price : 0.43%
Strike Price :  $32.50 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $1.52 per shareOptions Income : $304.00
Commission : $0.00
Net Premium :  $1.520 per shareNet Options Income : $304.00
Options Yield :  4.66%Annualized Options Yield : 15.19%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $30.98Discount if Exercised : 5.09%

This put option trade yields 4.66%, or 15.19% on an annualized basis. At $32.64 per share, HRL yields 2.30%, so I'm boosting dividend income by a factor of 6.61. If the options are exercised, I'll buy 200 shares at a cost basis of $30.98 per share, a discount of 5.09%.



#149 : 2018-02-23: Sold to Open 2 Contracts of Option MO Apr 20 2018 60.00 P

I'm willing to buy 200 shares of Altria Group (MO) for $60.00 per share on or before 20 April. MO closed at $64.59 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-04-20    Number of Days in Trade : 56
Price at Close :  $64.59 per shareDiscount at Strike Price : 7.11%
Strike Price :  $60.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $0.72 per shareOptions Income : $144.00
Commission : -$1.08
Net Premium :  $0.715 per shareNet Options Income : $142.92
Options Yield :  1.11%Annualized Options Yield : 7.22%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $59.27Discount if Exercised : 8.23%

This put option trade yields 1.11%, or 7.22% on an annualized basis. At $64.59 per share, MO yields 4.09%, so I'm boosting dividend income by a factor of 1.77. If the options are exercised, I'll buy 200 shares at a cost basis of $59.27 per share, a discount of 8.23%.



#150 : 2018-02-23: Sold to Open 1 Contract of Option PG Apr 20 2018 80.00 P

I'm willing to buy 100 shares of Procter & Gamble (PG) for $80.00 per share on or before 20 April. PG closed at $81.05 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-04-20    Number of Days in Trade : 56
Price at Close :  $81.05 per shareDiscount at Strike Price : 1.30%
Strike Price :  $80.00 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.71 per shareOptions Income : $171.00
Commission : -$0.79
Net Premium :  $1.702 per shareNet Options Income : $170.21
Options Yield :  2.10%Annualized Options Yield : 13.70%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $78.28Discount if Exercised : 3.42%

This put option trade yields 2.10%, or 13.70% on an annualized basis. At $81.05 per share, PG yields 3.40%, so I'm boosting dividend income by a factor of 4.02. If the option is exercised, I'll buy 100 shares at a cost basis of $78.28 per share, a discount of 3.42%.



#151 : 2018-02-23: Sold to Open 2 Contracts of Option SBUX May 18 2018 52.50 P

I'm willing to buy 200 shares of Starbucks (SBUX) for $52.50 per share on or before 18 May. SBUX closed at $56.14 per share on the date of my trade:

Open Date :  2018-02-23
Expiration Date :  2018-05-18    Number of Days in Trade : 84
Price at Close :  $56.14 per shareDiscount at Strike Price : 6.48%
Strike Price :  $52.50 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $0.97 per shareOptions Income : $194.00
Commission : -$0.98
Net Premium :  $0.965 per shareNet Options Income : $193.02
Options Yield :  1.72%Annualized Options Yield : 7.47%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $51.53Discount if Exercised : 8.22%

This put option trade yields 1.72%, or 7.47% on an annualized basis. At $56.14 per share, SBUX yields 2.14%, so I'm boosting dividend income by a factor of 3.50. If the options are exercised, I'll buy 200 shares at a cost basis of $51.53 per share, a discount of 8.22%.



#154 : 2018-02-26: Sold to Open 1 Contract of Option SBUX Apr 20 2018 92.50 P

I'm willing to buy 100 shares of Lowe's (LOW) for $92.50 per share on or before 20 April. SBUX closed at $97.51 per share on the date of my trade:

Open Date :  2018-02-26
Expiration Date :  2018-04-20    Number of Days in Trade : 53
Price at Close :  $97.51 per shareDiscount at Strike Price : 5.14%
Strike Price :  $92.50 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.96 per shareOptions Income : $196.00
Commission : -$0.79
Net Premium :  $1.952 per shareNet Options Income : $195.21
Options Yield :  2.00%Annualized Options Yield : 13.80%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $90.53Discount if Exercised : 7.16%

This put option trade yields 2.00%, or 13.80% on an annualized basis. At $97.51 per share, SBUX yields 1.68%, so I'm boosting dividend income by a factor of 8.20. If the option is exercised, I'll buy 100 shares at a cost basis of $90.53 per share, a discount of 7.16%.



#155 : 2018-02-26: Sold to Open 1 Contract of Option WMT Apr 6 2018 90.00 P

I'm willing to buy 100 shares of Walmart (WMT) for $90.00 per share on or before 6 April. WMT closed at $92.57 per share on the date of my trade:

Open Date :  2018-02-26
Expiration Date :  2018-04-06    Number of Days in Trade : 39
Price at Close :  $92.57 per shareDiscount at Strike Price : 2.78%
Strike Price :  $90.00 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.30 per shareOptions Income : $130.00
Commission : -$0.99
Net Premium :  $1.290 per shareNet Options Income : $129.01
Options Yield :  1.39%Annualized Options Yield : 13.05%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $88.69Discount if Exercised : 4.19%

This put option trade yields 1.39%, or 13.05% on an annualized basis. At $92.57 per share, WMT yields 2.25%, so I'm boosting dividend income by a factor of 5.81. If the option is exercised, I'll buy 100 shares at a cost basis of $88.69 per share, a discount of 4.19%.


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%. Most of these put option trades meet my desired criteria. However, the put options on SBUX, PG, MO, and EEM don't.


Bull Put Spreads


In February, I executed another bull put spread, which involves being short one put option and long another put option with the same expiration date but with a lower strike price. The short put generates income and the long put serves as insurance in case the underlying stock's price moves down sharply.

Here is the bull put spread I executed in February:

#1532018-02-26:  5×HD 20 Apr 2018 $185.00 P $           0.00 ( $   -2,327.70 )
#1522018-02-26:-5×HD 20 Apr 2018 $190.00 P $    3,450.00 ( $          -2.79 )→ breakeven is $187.76

The Home Depot (HDbull put spread is $5 and the maximum profit would exceed $1,000. 

Let's consider the bull put spread to see the possible outcomes. To simplify the presentation, I'm rounding premiums to cents and totals to dollars.

For 5 options, I received a net credit of $1,120, so the net premium is $2.24 ($1,120 ÷ 5 ÷ 100).
  1. Maximum profit:  HD closes above $190 per share on 20 April and both puts expire worthless. I'll earn the net premium of $2.24 (or $1,120).
  2. Maximum loss: HD closes below $185 per share on 20 April and both puts expire in the money. I'll realize the maximum possible loss, $5 - $2.24 = $2.76 (or $1,375).
  3. Breakeven: $190 - $2.24 = $187.76.

Options Expiring Soon


I look forward to expiring options, hopefully allowing me to secure more options income. Of course, for in the money options, I have decisions to make before the expiration date.

The following options expire in the next two months:

March:
#1412018-01-12:  6×WYNN 16 Mar 2018 $155.00 P $           0.00 ( $   -2,708.04 )
→ insurance for bull put spread  
#1402018-01-12:-6×WYNN 16 Mar 2018 $160.00 P $    3,791.00 ( $          -3.14 )
→ Out of the money with a  18% safety margin  
#1372018-01-12:  8×JPM 16 Mar 2018 $105.00 P $           0.00 ( $      -842.23 )
→ insurance for bull put spread  
#1362018-01-12:-8×JPM 16 Mar 2018 $110.00 P $    1,864.00 ( $        -10.29 )
→ Out of the money with a  7% safety margin  
#1352018-01-12:-3×KSS 16 Mar 2018 $55.00 P $       405.00 ( $          -0.14 )
→ Out of the money with a  14% safety margin  
#1312018-01-10:-3×TGT 16 Mar 2018 $60.00 P $       144.00 ( $          -1.48 )
→ Out of the money with a  17% safety margin  
#1262017-11-30:-2×BBT 16 Mar 2018 $46.00 P $       192.00 ( $          -0.99 )
→ Out of the money with a  22% safety margin  
#1182017-11-17:-2×TXN 16 Mar 2018 $85.00 P $       200.00 ( $          -0.99 )
→ Out of the money with a  31% safety margin  

April:
#1552018-02-26:-1×WMT 06 Apr 2018 $90.00 P $       130.00 ( $          -0.99 )
→ In the money by  1% — caution!   
#1542018-02-26:-1×LOW 20 Apr 2018 $92.50 P $       196.00 ( $          -0.79 )
→ In the money by  6% — caution!   
#1532018-02-26:  5×HD 20 Apr 2018 $185.00 P $           0.00 ( $   -2,327.70 )
→ insurance for bull put spread  
#1522018-02-26:-5×HD 20 Apr 2018 $190.00 P $    3,450.00 ( $          -2.79 )
→ In the money by  4% — caution!   
#1502018-02-23:-1×PG 20 Apr 2018 $80.00 P $       171.00 ( $          -0.79 )
→ At the money  — caution!  
#1492018-02-23:-2×MO 20 Apr 2018 $60.00 P $       144.00 ( $          -1.08 )
→ Out of the money with a  9% safety margin   
#1462018-02-23:-2×DIS 06 Apr 2018 $112.00 C $       142.00 ( $          -0.74 )→ Out of the money with a  6% safety margin   
#1392018-01-12:  6×RL 20 Apr 2018 $100.00 P $           0.00 ( $   -2,427.25 )
→ insurance for bull put spread  
#1382018-01-12:-6×RL 20 Apr 2018 $105.00 P $    3,566.00 ( $          -3.34 )
→ At the money  — caution!   
#1302018-01-10:-3×KBH 20 Apr 2018 $31.00 P $       306.00 ( $          -1.49 )
→ In the money by  6% — caution!  
#1282018-01-10:-1×AXP 20 Apr 2018 $100.00 P $       330.00 ( $          -0.80 )
→ In the money by  1% — caution!  
#1152017-10-20:-1×D 20 Apr 2018 $80.00 C $       253.00 ( $          -0.35 )
→ Out of the money with a  9% safety margin  

The options expiring in March seem to be doing fine, but I'll have to monitor the April options carefully. Fortunately, I have about 40 days for those to recover.

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:

IDDATE:NO×TICKER OPTIONINCOME( EXPENSES )ROLLEDTOTAL➤ SECURED
#1562018-02-26:-2×ABBV 17 Jan 2020 $100.00 C $    5,508.00 ( $          -1.24 )$    26,034.55 ➤ $    -6,602.45 
#1552018-02-26:-1×WMT 06 Apr 2018 $90.00 P $       130.00 ( $          -0.99 )$    20,527.79 ➤ $    -6,601.21 
#1542018-02-26:-1×LOW 20 Apr 2018 $92.50 P $       196.00 ( $          -0.79 )$    20,398.78 ➤ $    -6,600.22 
#1532018-02-26:  5×HD 20 Apr 2018 $185.00 P $           0.00 ( $   -2,327.70 )$    20,203.57 ➤ $    -6,599.43 
#1522018-02-26:-5×HD 20 Apr 2018 $190.00 P $    3,450.00 ( $          -2.79 )$    22,531.27 ➤ $    -4,271.73 
#1512018-02-23:-2×SBUX 18 May 2018 $52.50 P $       194.00 ( $          -0.98 )$    19,084.06 ➤ $    -4,268.94 
#1502018-02-23:-1×PG 20 Apr 2018 $80.00 P $       171.00 ( $          -0.79 )$    18,891.04 ➤ $    -4,267.96 
#1492018-02-23:-2×MO 20 Apr 2018 $60.00 P $       144.00 ( $          -1.08 )$    18,720.83 ➤ $    -4,267.17 
#1482018-02-23:-2×HRL 15 Jun 2018 $32.50 P $       304.00 ( $            0.00 )$    18,577.91 ➤ $    -4,266.09 
#1472018-02-23:-2×EEM 18 May 2018 $46.00 P $       156.00 ( $          -2.42 )$    18,273.91 ➤ $    -4,266.09 
#1462018-02-23:-2×DIS 06 Apr 2018 $112.00 C $       142.00 ( $          -0.74 )$    18,120.33 ➤ $    -4,263.67 
#1452018-02-23:-3×BAC 18 May 2018 $29.00 P $       150.00 ( $          -1.47 )$    17,979.07 ➤ $    -4,262.93 
#1442018-02-23:-2×AAPL 18 May 2018 $155.00 P $       374.00 ( $          -2.43 )$    17,830.54 ➤ $    -4,261.46 
#1432018-02-16:-3×NKE 20 Jul 2018 $60.00 P $       441.00 ( $          -2.38 )$    17,458.97 ➤ $    -4,259.03 
#1422018-02-16:-2×GILD 15 Jun 2018 $85.00 C $       678.00 ( $          -1.13 )$    17,020.35 ➤ $    -4,256.65 
#1412018-01-12:  6×WYNN 16 Mar 2018 $155.00 P $           0.00 ( $   -2,708.04 )$    16,343.48 ➤ $    -4,255.52 
#1402018-01-12:-6×WYNN 16 Mar 2018 $160.00 P $    3,791.00 ( $          -3.14 )$    19,051.52 ➤ $    -1,547.48 
#1392018-01-12:  6×RL 20 Apr 2018 $100.00 P $           0.00 ( $   -2,427.25 )$    15,263.66 ➤ $    -1,544.34 
#1382018-01-12:-6×RL 20 Apr 2018 $105.00 P $    3,566.00 ( $          -3.34 )$    17,690.91 ➤ $         882.91 
#1372018-01-12:  8×JPM 16 Mar 2018 $105.00 P $           0.00 ( $      -842.23 )$    14,128.25 ➤ $         886.25 
#1362018-01-12:-8×JPM 16 Mar 2018 $110.00 P $    1,864.00 ( $        -10.29 )$    14,970.48 ➤ $      1,728.48 
#1352018-01-12:-3×KSS 16 Mar 2018 $55.00 P $       405.00 ( $          -0.14 )$    13,116.77 ➤ $      1,738.77 
#1342018-01-10:-4×QCOM 17 Jan 2020 $65.00 C $    3,140.00 ( $          -2.05 )$    12,711.91 ➤ $      1,738.91 
#1332018-01-10:-20×F 17 Jan 2020 $12.00 C $    3,720.00 ( $        -15.96 )$      9,573.96 ➤ $      1,740.96 
#1322018-01-10:-2×KO 18 Jan 2019 $47.00 C $       414.00 ( $          -2.58 )$      5,869.92 ➤ $      1,756.92 
#1312018-01-10:-3×TGT 16 Mar 2018 $60.00 P $       144.00 ( $          -1.48 )$      5,458.50 ➤ $      1,759.50 
#1302018-01-10:-3×KBH 20 Apr 2018 $31.00 P $       306.00 ( $          -1.49 )$      5,315.98 ➤ $      1,760.98 
#1292018-01-10:-2×FAST 18 May 2018 $50.00 P $       350.00 ( $            0.00 )$      5,011.47 ➤ $      1,762.47 
#1282018-01-10:-1×AXP 20 Apr 2018 $100.00 P $       330.00 ( $          -0.80 )$      4,661.47 ➤ $      1,762.47 
#1272017-11-30:-2×EEM 19 Jan 2018 $46.00 P $       234.00 ( $          -0.85 )$      4,332.27 ➤ $      1,763.27 
#1262017-11-30:-2×BBT 16 Mar 2018 $46.00 P $       192.00 ( $          -0.99 )$      4,099.12 ➤ $      1,530.12 
#1252017-11-21:-3×X 19 Jan 2018 $26.00 P $       252.00 ( $          -2.09 )$      3,908.11 ➤ $      1,531.11 
#1242017-11-21:-2×RL 19 Jan 2018 $80.00 P $       150.00 ( $          -0.09 )$      3,658.20 ➤ $      1,281.20 
#1232017-11-21:-3×BAC 19 Jan 2018 $25.00 P $       120.00 ( $          -2.23 )$      3,508.29 ➤ $      1,131.29 
#1222017-11-17:-1×VLO 18 Jan 2019 $80.00 C $       892.00 ( $          -0.64 )$      3,390.52 ➤ $      1,013.52 
#1212017-11-17:-3×NKE 20 Apr 2018 $50.00 P $       208.00 ( $        -31.15 )→ #143$      2,499.16 ➤ $      1,014.16 
#1202017-11-17:-2×AAPL 16 Feb 2018 $150.00 P $       376.00 ( $          -1.60 )$      2,322.31 ➤ $         837.31 
#1192017-11-17:-2×WBA 15 Dec 2017 $70.00 P $       244.00 ( $          -0.99 )$      1,947.91 ➤ $         462.91 
#1182017-11-17:-2×TXN 16 Mar 2018 $85.00 P $       200.00 ( $          -0.99 )$      1,704.90 ➤ $         219.90 
#1172017-11-17:-2×MO 19 Jan 2018 $62.50 P $       140.00 ( $          -0.99 )$      1,505.89 ➤ $         220.89 
#1162017-10-20:-2×INTC 17 Jan 2020 $40.00 C $    1,032.00 ( $          -1.01 )$      1,366.88 ➤ $           81.88 
#1152017-10-20:-1×D 20 Apr 2018 $80.00 C $       253.00 ( $          -0.35 )$         335.89 ➤ $           82.89 
#1142017-10-20:-1×DIS 15 Dec 2017 $95.00 P $       145.00 ( $        -17.59 )$           83.24 ➤ $           83.24 
#1132017-09-27:-2×VLO 17 Nov 2017 $70.00 P $       162.00 ( $          -0.99 )$          -44.17 ➤ $          -44.17 
#1122017-09-14:-1×WFC 19 Jan 2018 $50.00 P $       166.00 ( $          -1.59 )$        -205.18 ➤ $        -205.18 
#1112017-09-14:-2×AAPL 15 Dec 2017 $135.00 P $       204.00 ( $        -14.17 )→ #120$        -369.59 ➤ $        -369.59 
#1102017-08-30:-2×WMT 15 Dec 2017 $75.00 P $       314.00 ( $          -7.15 )$        -559.42 ➤ $        -559.42 
#1092017-08-30:-2×WFC 19 Jan 2018 $50.00 P $       364.00 ( $          -1.30 )$        -866.27 ➤ $        -866.27 
#1082017-08-30:-2×TGT 19 Jan 2018 $50.00 P $       336.00 ( $          -1.59 )$     -1,228.97 ➤ $     -1,228.97 
#1072017-08-30:-2×GILD 15 Feb 2018 $80.00 C $       923.00 ( $      -421.02 )→ #142$     -1,563.38 ➤ $     -1,563.38 
#1062017-08-30:-20×F 16 Mar 2018 $12.00 C $       480.00 ( $   -2,221.51 )→ #133$     -2,065.36 ➤ $     -2,065.36 
#1052017-08-30:-2×ABBV 15 Jun 2018 $70.00 C $    1,373.00 ( $ -10,102.43 )→ #156$        -323.85 ➤ $        -323.85 
#1042017-08-30:-4×QCOM 20 Apr 2018 $60.00 C $       524.00 ( $   -2,963.96 )→ #134$      8,405.58 ➤ $      8,405.58 
#1032017-08-30:-3×CSCO 16 Feb 2018 $34.00 C $       182.00 ( $          -2.38 )$    10,845.54 ➤ $    10,845.54 
#1022017-08-18:-2×HRL 15 Dec 2017 $32.50 P $       200.00 ( $          -0.11 )$    10,665.92 ➤ $    10,665.92 
#1012017-07-18:-3×PFE 15 Dec 2017 $34.00 C $       210.00 ( $          -2.39 )$    10,466.03 ➤ $    10,466.03 

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:
$ 26,035$    -6,602
Last Month:
$ 26,761$     3,082
Difference:
$     -726$    -9,685

I started 2018 with $11,420 in secured options income. Adding my 2018 goal of $12,000 in secured options income makes the target $23,420.

With the shortfall of $9,685 I have lots of ground to make up! In fact, I'll have to secure $33,105 in the rest of 2018 to achieve my secured options income goal for 2018!

If all goes well, I can look forward to "recovering" about $3,000 of that shortfall next Friday when my March options expire.

Suddenly, the road ahead looks pretty steep and treacherous.

Thanks for reading and take care, everybody!

8 comments :

  1. Keep posting these. The more I read them the more I begin to understand how the options world works. Good luck with ABBV.
    DFG

    ReplyDelete
    Replies
    1. Thanks for your note, Dividend Family Guy -- I hope to continue writing options updates! All the best and happy investing!

      Delete
    2. It's tough to take the $10,102 hit on ABBV. But your actual cost is $4594 (5502 - 10102) plus you already rec'd $1373 when you wrote the first option. Also you will receive $6000 additional capital gains if you sell ABBV at the $100 strike price plus the quarterly dividends. Pls keep us updated on the trades progress.
      JP

      Delete
    3. Yes, jparr8350 -- it looks bad because I keep my options stats and portfolio stats separate. I'll try stress that in future posts. I'll continue to focus on the fact that options trading has enabled me to spend about $26,000 to buy more dividend growth stocks. Those extras pay dividends, which eventually turns into more dividend growth stocks!

      Delete
  2. When you sell a put, how much cash do you have to keep in your account to cover the possible execution? For example, when you sell the Walmart put with a $90 strike price, you're on the hook for $9000 if it gets executed. Do you have to keep $9000 in cash in your account for that put or some percentage thereof? Thanks, I enjoy the writeups.

    ReplyDelete
    Replies
    1. I believe the requirement for non-margin accounts is that you have to set aside the full amount, in this case $9,000. These are called cash-covered puts. I sell "naked" puts covered by the collateral of the stocks I hold in my account. It is a margin account at Interactive Brokers. IB automatically removes 20% of the cash obligation of the sold put from the (leveraged) available cash. In this case $1,800.

      Delete
  3. Ferdi,

    Thanks for the update on your options activity. I too got caught up in some big moves both higher and lower on some of my positions which really hurt. Luckily I'm still in the green overall despite the relatively big loss that I took on some of my calls.

    Also, noticed you sold the 4/20 $60 put on MO. I did that same one as well although with only one contract because I'm a bit tapped for capital right now as I wait for expiration to roll off some positions and for time to go by to reduce the costs on some of my positions.

    All the best and hopefully you get back on track in March with your realized profits.

    ReplyDelete
    Replies
    1. Hi, Passive IncomePursuit -- at some point this bull market will turn over and our covered calls will be more fruitful. I read your last options report and noticed that you were doing quite well, despite some of the setbacks you mention. It is good to share updates, both to learn and (hopefully) to teach. Though I still feel like a learner! I'm slowly dipping my toe in the water on some combo trades, but I'm not so confident that I'm choosing the right strike prices and expiration dates. But I'm learning, and that's key!

      Take care and happy trading/investing!

      Delete

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