Saturday, July 21, 2018

Options Update: June 2018 (Part 2)

Welcome to Part 2 of my June options update!

With lots of trading activity in June, I decided to split this update into two parts. Part 1 provided a snapshot of June's trades and I reported on expired, closed, and rolled options. I also reviewed the options that expire soon.

Part 2 provides details on new covered call and put contracts, as well as a spread trade I executed last month. It concludes with the usual running tally of the total amount I received from options trades, as well as the options premiums secured due to options that expired.

I added options trading to DivGro in June 2016 to leverage the equity in my portfolio and to generate additional income. To date, I've collected a total of $32,671 in options income.

Snapshot


Following is a copy of the snapshot from Part 1 showing all the trades I executed in June:


New Covered Calls


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

#2052018-06-14:-2×WBA 19 Oct 2018 $70.00 C $       288.00 ( $          -0.98 )$    28,593.81 ➤ $      5,365.81 
#2042018-06-14:-1×TSM 18 Jan 2019 $45.00 C $         55.00 ( $          -0.34 )$    28,306.79 ➤ $      5,366.79 
#2032018-06-14:-1×TRV 19 Oct 2018 $140.00 C $       124.00 ( $          -1.09 )$    28,252.13 ➤ $      5,367.13 
#2022018-06-14:-1×TJX 19 Oct 2018 $105.00 C $         90.00 ( $          -0.34 )$    28,129.22 ➤ $      5,368.22 
#2012018-06-14:-1×T 19 Oct 2018 $36.00 C $         94.00 ( $          -1.58 )$    28,039.56 ➤ $      5,368.56 
#2002018-06-14:-1×RDS.B 18 Jan 2019 $80.00 C $       115.00 ( $          -0.34 )$    27,947.14 ➤ $      5,370.14 
#1992018-06-14:-2×PG 19 Oct 2018 $85.00 C $         74.00 ( $          -0.98 )$    27,832.48 ➤ $      5,370.48 
#1982018-06-14:-1×LOW 18 Jan 2019 $120.00 C $       110.00 ( $          -0.79 )$    27,759.46 ➤ $      5,371.46 
#1972018-06-14:-1×JNJ 21 Dec 2018 $135.00 C $       150.00 ( $          -1.09 )$    27,650.25 ➤ $      5,372.25 
#1962018-06-14:-2×GILD 16 Nov 2018 $85.00 C $       166.00 ( $          -1.58 )$    27,501.34 ➤ $      5,373.34 
#1952018-06-14:-2×DIS 19 Oct 2018 $125.00 C $       116.00 ( $          -1.58 )$    27,336.92 ➤ $      5,374.92 
#1942018-06-14:-2×CMCSA 17 Aug 2018 $35.00 C $       164.00 ( $          -1.58 )$    27,222.50 ➤ $      5,376.50 
#1932018-06-14:-1×BUD 21 Dec 2018 $115.00 C $         85.00 ( $          -0.79 )$    27,060.08 ➤ $      5,378.08 
#1922018-06-14:-1×AAPL 20 Jul 2018 $200.00 C $       122.00 ( $          -1.09 )$    26,975.87 ➤ $      5,378.87 


#192 : 2018-06-14: Sold to Open 1 Contract of Option AAPL Jul 20 2018 200.00 C

I own 100 shares of Apple (AAPL) at a cost basis of $104.41 per share. I'm willing to sell these shares for $200.00 on or before 20 July:

Open Date :  2018-06-14
Expiration Date :  2018-07-20    Number of Days in Trade : 36
Cost Basis :  $104.41 per shareGain at Strike Price : 91.55%
Strike Price :  $200.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.22 per shareOptions Income : $122.00
Commission : $1.09
Net Premium :  $1.209 per shareNet Options Income : $120.91
Options Yield :  1.16%Annualized Options Yield : 11.75%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $103.20Gain if Exercised : 93.80%

This covered call yields 1.16%, or 11.75% on an annualized basis. The yield on cost of my AAPL position is 2.80%, so I'm boosting dividend income by a factor of 4.20. If the option is exercised, I'll sell 100 shares of AAPL at a reduced cost basis of $103.20 per share, for capital gains of 93.80%.



#193 : 2018-06-14: Sold to Open 1 Contract of Option BUD Dec 21 2018 115.00 C

I own 100 shares of Anheuser-Busch InBev SA/NV (BUD) at a cost basis of $105.00 per share. I'm willing to sell these shares for $115.00 on or before 21 December:

Open Date :  2018-06-14
Expiration Date :  2018-12-21    Number of Days in Trade : 190
Cost Basis :  $105.00 per shareGain at Strike Price : 9.52%
Strike Price :  $115.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $0.85 per shareOptions Income : $85.00
Commission : $0.79
Net Premium :  $0.842 per shareNet Options Income : $84.21
Options Yield :  0.80%Annualized Options Yield : 1.54%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $104.16Gain if Exercised : 10.41%

This covered call yields 0.80%, or 1.54% on an annualized basis. The yield on cost of my BUD position is 4.13%, so I'm boosting dividend income by a factor of 0.37. If the option is exercised, I'll sell 100 shares of BUD at a reduced cost basis of $104.16 per share, for capital gains of 10.41%.



#194 : 2018-06-14: Sold to Open 2 Contracts of Option CMCSA Aug 17 2018 35.00 C

I own 200 shares of Comcast (CMCSA) at a cost basis of $33.07 per share. I'm willing to sell these shares for $35.00 on or before 17 August:

Open Date :  2018-06-14
Expiration Date :  2018-08-17    Number of Days in Trade : 64
Cost Basis :  $33.07 per shareGain at Strike Price : 5.84%
Strike Price :  $35.00 per share
Number of Contracts : 2Number of Shares :200
Call Premium :  $0.82 per shareOptions Income : $164.00
Commission : $1.58
Net Premium :  $0.812 per shareNet Options Income : $162.42
Options Yield :  2.46%Annualized Options Yield : 14.01%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $32.26Gain if Exercised : 8.50%

This covered call yields 2.46%, or 14.01% on an annualized basis. The yield on cost of my CMCSA position is 2.30%, so I'm boosting dividend income by a factor of 6.10. If the options are exercised, I'll sell 200 shares of CMCSA at a reduced cost basis of $32.26 per share, for capital gains of 8.50%.



#195 : 2018-06-14: Sold to Open 2 Contracts of Option DIS Oct 19 2018 125.00 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 $125.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $99.20 per shareGain at Strike Price : 26.01%
Strike Price :  $125.00 per share
Number of Contracts : 2Number of Shares :200
Call Premium :  $0.58 per shareOptions Income : $116.00
Commission : $1.58
Net Premium :  $0.572 per shareNet Options Income : $114.42
Options Yield :  0.58%Annualized Options Yield : 1.66%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $98.63Gain if Exercised : 26.74%

This covered call yields 0.58%, or 1.66% 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 0.98. If the options are exercised, I'll sell 200 shares of DIS at a reduced cost basis of $98.63 per share, for capital gains of 26.74%.



#196 : 2018-06-14: Sold to Open 2 Contracts of Option GILD Nov 16 2018 85.00 C

I own 200 shares of Gilead Sciences (GILD) at a cost basis of $80.22 per share. I'm willing to sell these shares for $85.00 on or before 16 November:

Open Date :  2018-06-14
Expiration Date :  2018-11-16    Number of Days in Trade : 155
Cost Basis :  $80.22 per shareGain at Strike Price : 5.96%
Strike Price :  $85.00 per share
Number of Contracts : 2Number of Shares :200
Call Premium :  $0.83 per shareOptions Income : $166.00
Commission : $1.58
Net Premium :  $0.822 per shareNet Options Income : $164.42
Options Yield :  1.02%Annualized Options Yield : 2.41%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $79.40Gain if Exercised : 7.06%

This covered call yields 1.02%, or 2.41% on an annualized basis. The yield on cost of my GILD position is 2.84%, so I'm boosting dividend income by a factor of 0.85. If the options are exercised, I'll sell 200 shares of GILD at a reduced cost basis of $79.40 per share, for capital gains of 7.06%.



#197 : 2018-06-14: Sold to Open 1 Contract of Option JNJ Dec 21 2018 135.00 C

I own 100 shares of Johnson & Johnson (JNJ) at a cost basis of $108.76 per share. I'm willing to sell these shares for $135.00 on or before 21 December:

Open Date :  2018-06-14
Expiration Date :  2018-12-21    Number of Days in Trade : 190
Cost Basis :  $108.76 per shareGain at Strike Price : 24.13%
Strike Price :  $135.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.50 per shareOptions Income : $150.00
Commission : $1.58
Net Premium :  $1.484 per shareNet Options Income : $148.42
Options Yield :  1.36%Annualized Options Yield : 2.62%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $107.28Gain if Exercised : 25.84%

This covered call yields 1.36%, or 2.62% on an annualized basis. The yield on cost of my JNJ position is 3.31%, so I'm boosting dividend income by a factor of 0.79. If the option is exercised, I'll sell 100 shares of JNJ at a reduced cost basis of $107.28 per share, for capital gains of 25.84%.



#198 : 2018-06-14: Sold to Open 1 Contract of Option LOW Jan 18 2019 120.00 C

I own 100 shares of Lowe's (LOW) at a cost basis of $92.50 per share. I'm willing to sell these shares for $120.00 on or before 18 January:

Open Date :  2018-06-14
Expiration Date :  2019-01-18    Number of Days in Trade : 218
Cost Basis :  $92.50 per shareGain at Strike Price : 29.73%
Strike Price :  $120.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.10 per shareOptions Income : $110.00
Commission : $0.79
Net Premium :  $1.092 per shareNet Options Income : $109.21
Options Yield :  1.18%Annualized Options Yield : 1.98%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $91.41Gain if Exercised : 31.28%

This covered call yields 1.18%, or 1.98% on an annualized basis. The yield on cost of my LOW position is 2.08%, so I'm boosting dividend income by a factor of 0.95. If the option is exercised, I'll sell 100 shares of LOW at a reduced cost basis of $91.41 per share, for capital gains of 31.28%.



#199 : 2018-06-14: Sold to Open 2 Contracts of Option PG Oct 19 2018 85.00 C

I own 200 shares of Procter & Gamble (PG) at a cost basis of $77.35 per share. I'm willing to sell these shares for $85.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $77.35 per shareGain at Strike Price : 9.89%
Strike Price :  $85.00 per share
Number of Contracts : 2Number of Shares :200
Call Premium :  $0.37 per shareOptions Income : $74.00
Commission : $0.98
Net Premium :  $0.365 per shareNet Options Income : $73.02
Options Yield :  0.47%Annualized Options Yield : 1.36%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $76.98Gain if Exercised : 10.41%

This covered call yields 0.47%, or 1.36% on an annualized basis. The yield on cost of my PG position is 3.71%, so I'm boosting dividend income by a factor of 0.37. If the options are exercised, I'll sell 200 shares of PG at a reduced cost basis of $76.98 per share, for capital gains of 10.41%.



#200 : 2018-06-14: Sold to Open 1 Contract of Option RDS.B Jan 18 2019 80.00 C

I own 100 shares of Royal Dutch Shell (RDS.B) at a cost basis of $71.10 per share. I'm willing to sell these shares for $80.00 on or before 18 January:

Open Date :  2018-06-14
Expiration Date :  2019-01-18    Number of Days in Trade : 218
Cost Basis :  $71.10 per shareGain at Strike Price : 12.52%
Strike Price :  $80.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.15 per shareOptions Income : $115.00
Commission : $0.34
Net Premium :  $1.147 per shareNet Options Income : $114.66
Options Yield :  1.61%Annualized Options Yield : 2.70%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $69.95Gain if Exercised : 14.36%

This covered call yields 1.61%, or 2.70% on an annualized basis. The yield on cost of my RDS.B position is 5.29%, so I'm boosting dividend income by a factor of 0.51. If the option is exercised, I'll sell 100 shares of RDS.B at a reduced cost basis of $69.95 per share, for capital gains of 14.36%.



#201 : 2018-06-14: Sold to Open 1 Contract of Option T Oct 19 2018 36.00 C

I own 100 shares of AT&T (T) at a cost basis of $33.01 per share. I'm willing to sell these shares for $36.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $33.01 per shareGain at Strike Price : 9.06%
Strike Price :  $36.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $0.94 per shareOptions Income : $94.00
Commission : $1.58
Net Premium :  $0.924 per shareNet Options Income : $92.42
Options Yield :  2.80%Annualized Options Yield : 8.05%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $32.09Gain if Exercised : 12.20%

This covered call yields 2.80%, or 8.05% on an annualized basis. The yield on cost of my T position is 6.06%, so I'm boosting dividend income by a factor of 1.33. If the option is exercised, I'll sell 100 shares of T at a reduced cost basis of $32.09 per share, for capital gains of 12.20%.



#202 : 2018-06-14: Sold to Open 1 Contract of Option TJX Oct 19 2018 105.00 C

I own 100 shares of TJX (TJX) at a cost basis of $88.42 per share. I'm willing to sell these shares for $105.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $88.42 per shareGain at Strike Price : 18.75%
Strike Price :  $105.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $0.90 per shareOptions Income : $90.00
Commission : $0.34
Net Premium :  $0.897 per shareNet Options Income : $89.66
Options Yield :  1.01%Annualized Options Yield : 2.92%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $87.52Gain if Exercised : 19.97%

This covered call yields 1.01%, or 2.92% on an annualized basis. The yield on cost of my TJX position is 1.76%, so I'm boosting dividend income by a factor of 1.65. If the option is exercised, I'll sell 100 shares of TJX at a reduced cost basis of $87.52 per share, for capital gains of 19.97%.



#203 : 2018-06-14: Sold to Open 1 Contract of Option TRV Oct 19 2018 140.00 C

I own 100 shares of Travelers (TRV) at a cost basis of $115.88 per share. I'm willing to sell these shares for $140.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $115.88 per shareGain at Strike Price : 20.81%
Strike Price :  $140.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.24 per shareOptions Income : $124.00
Commission : $1.09
Net Premium :  $1.229 per shareNet Options Income : $122.91
Options Yield :  1.06%Annualized Options Yield : 3.05%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $114.65Gain if Exercised : 22.11%

This covered call yields 1.06%, or 3.05% on an annualized basis. The yield on cost of my TRV position is 2.66%, so I'm boosting dividend income by a factor of 1.15. If the option is exercised, I'll sell 100 shares of TRV at a reduced cost basis of $114.65 per share, for capital gains of 22.11%.



#204 : 2018-06-14: Sold to Open 1 Contract of Option TSM Jan 18 2019 45.00 C

I own 100 shares of Taiwan Semiconductor Manufacturing (TSM) at a cost basis of $45.18 per share. I'm willing to sell these shares for $45.00 on or before 18 January:

Open Date :  2018-06-14
Expiration Date :  2019-01-18    Number of Days in Trade : 218
Cost Basis :  $45.18 per shareGain at Strike Price : -0.40%
Strike Price :  $45.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $0.55 per shareOptions Income : $55.00
Commission : $0.34
Net Premium :  $0.547 per shareNet Options Income : $54.66
Options Yield :  1.21%Annualized Options Yield : 2.03%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $44.63Gain if Exercised : 0.82%

This covered call yields 1.21%, or 2.03% on an annualized basis. The yield on cost of my TSM position is 2.57%, so I'm boosting dividend income by a factor of 0.79. If the option is exercised, I'll sell 100 shares of TSM at a reduced cost basis of $44.63 per share, for capital gains of 0.82%.



#205 : 2018-06-14: Sold to Open 1 Contract of Option WBA Oct 19 2018 70.00 C

I own 200 shares of Walgreens Boots Alliances (WBA) at a cost basis of $65.18 per share. I'm willing to sell these shares for $70.00 on or before 19 October:

Open Date :  2018-06-14
Expiration Date :  2018-10-19    Number of Days in Trade : 127
Cost Basis :  $65.18 per shareGain at Strike Price : 7.39%
Strike Price :  $70.00 per share
Number of Contracts : 1Number of Shares :100
Call Premium :  $1.44 per shareOptions Income : $144.00
Commission : $0.98
Net Premium :  $1.430 per shareNet Options Income : $143.02
Options Yield :  2.19%Annualized Options Yield : 6.31%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $63.75Gain if Exercised : 9.80%

This covered call yields 2.19%, or 6.31% on an annualized basis. The yield on cost of my WBA position is 2.70%, so I'm boosting dividend income by a factor of 2.34. If the option is exercised, I'll sell 100 shares of WBA at a reduced cost basis of $63.75 per share, for capital gains of 9.80%.



For covered calls, I think an achievable goal is to earn double the dividend yield. Only the covered calls on AAPL, CMCSA, and WBA double each stock's dividend yield. Unfortunately, most of the other covered calls offer low premiums for the margin of safety I'm comfortable with.

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:

#2122018-06-20:-2×SBUX 17 Jan 2020 $50.00 P $ 915.00 ( $ -2.57 )
#2112018-06-20:-1×HSY 20 Jul 2018 $92.00 P $ 194.00 ( $ -0.79 )
#1912018-06-12:-2×TPR 20 Jul 2018 $45.00 P $ 140.00 ( $ -1.58 )
#1902018-06-12:-1×MKC 21 Sep 2018 $100.00 P $ 185.00 ( $ -0.24 )
#1892018-06-12:-2×AEO 17 Aug 2018 $24.00 P $ 180.00 ( $  0.00 )


#189 : 2018-06-12: Sold to Open 2 Contracts of Option AEO Aug 17 2018 24.00 P

I'm willing to buy 200 shares of American Eagle Outfitters (AEO) for $24.00 per share on or before 17 August. AEO closed at $24.37 per share on the date of my trade:

Open Date :  2018-06-12
Expiration Date :  2018-08-17    Number of Days in Trade : 66
Price at Close :  $24.37 per shareDiscount at Strike Price : 1.52%
Strike Price :  $24.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $0.90 per shareOptions Income : $180.00
Commission : $0.00
Net Premium :  $0.900 per shareNet Options Income : $180.00
Options Yield :  3.69%Annualized Options Yield : 20.44%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $23.10Discount if Exercised : 5.21%

This put option trade yields 3.69%, or 20.44% on an annualized basis. At $24.37 per share, AEO yields 2.26%, so I'm boosting dividend income by a factor of 9.06. If the options are exercised, I'll buy 200 shares at a cost basis of $23.10 per share, a discount of 5.21%.



#190 : 2018-06-12: Sold to Open 1 Contract of Option MKC Sep 21 2018 100.00 P

I'm willing to buy 100 shares of McCormick (MKC) for $100.00 per share on or before 21 September. MKC closed at $104.72 per share on the date of my trade:

Open Date :  2018-06-12
Expiration Date :  2018-09-21    Number of Days in Trade : 101
Price at Close :  $104.72 per shareDiscount at Strike Price : 4.51%
Strike Price :  $100.00 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.85 per shareOptions Income : $185.00
Commission : $0.24
Net Premium :  $1.852 per shareNet Options Income : $185.24
Options Yield :  1.77%Annualized Options Yield : 6.40%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $98.15Discount if Exercised : 6.27%

This put option trade yields 1.77%, or 6.40% on an annualized basis. At $104.72 per share, MKC yields 1.99%, so I'm boosting dividend income by a factor of 3.22. If the option is exercised, I'll buy 100 shares at a cost basis of $98.15 per share, a discount of 6.27%.



#191 : 2018-06-12: Sold to Open 2 Contracts of Option TPR Jul 20 2018 45.00 P

I'm willing to buy 200 shares of Tapestry (TPR) for $45.00 per share on or before 20 July. TPR closed at $45.82 per share on the date of my trade:

Open Date :  2018-06-12
Expiration Date :  2018-07-20    Number of Days in Trade : 38
Price at Close :  $45.82 per shareDiscount at Strike Price : 1.79%
Strike Price :  $45.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $0.70 per shareOptions Income : $140.00
Commission : $1.58
Net Premium :  $0.708 per shareNet Options Income : $141.58
Options Yield :  1.54%Annualized Options Yield : 14.85%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $44.31Discount if Exercised : 3.30%

This put option trade yields 1.54%, or 14.85% on an annualized basis. At $45.82 per share, TPR yields 2.95%, so I'm boosting dividend income by a factor of 5.04. If the options are exercised, I'll buy 200 shares at a cost basis of $44.31 per share, a discount of 3.30%.



#211 : 2018-06-20: Sold to Open 1 Contract of Option HSY Jul 20 2018 92.00 P

I'm willing to buy 100 shares of Hershey (HSY) for $92.00 per share on or before 20 July. HSY closed at $91.86 per share on the date of my trade:

Open Date :  2018-06-20
Expiration Date :  2018-07-20    Number of Days in Trade : 30
Price at Close :  $91.86 per shareDiscount at Strike Price : -0.15%
Strike Price :  $92.00 per share
Number of Contracts : 1Number of Shares :100
Put Premium :  $1.94 per shareOptions Income : $194.00
Commission : $0.79
Net Premium :  $1.948 per shareNet Options Income : $194.79
Options Yield :  2.12%Annualized Options Yield : 25.82%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $90.07Discount if Exercised : 1.95%

This put option trade yields 2.12%, or 25.82% on an annualized basis. At $91.86 per share, HSY yields 2.86%, so I'm boosting dividend income by a factor of 9.04. If the option is exercised, I'll buy 100 shares at a cost basis of $90.07 per share, a discount of 1.95%.



#212 : 2018-06-20: Sold to Open 2 Contracts of Option SBUX Jan 17 2020 50.00 P

I'm willing to buy 200 shares of Starbucks (SBUX) for $50.00 per share on or before 17 January 2020. SBUX closed at $52.22 per share on the date of my trade:

Open Date :  2018-06-20
Expiration Date :  2020-01-17    Number of Days in Trade : 576
Price at Close :  $52.22 per shareDiscount at Strike Price : 4.25%
Strike Price :  $50.00 per share
Number of Contracts : 2Number of Shares :200
Put Premium :  $4.58 per shareOptions Income : $915.00
Commission : $2.57
Net Premium :  $4.588 per shareNet Options Income : $917.57
Options Yield :  8.79%Annualized Options Yield : 5.57%
----------------------------  ----------------------------------------------------  -----------
Commission if Exercised : $0.00
Cost Basis if Exercised : $45.44Discount if Exercised : 12.99%

This put option trade yields 8.79%, or 5.57% on an annualized basis. At $52.22 per share, SBUX yields 2.76%, so I'm boosting dividend income by a factor of 2.02. If the options are exercised, I'll buy 200 shares at a cost basis of $45.44 per share, a discount of 12.99%.



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%.

The AEO, TPR, and HSY options trades qualify with boost factors exceeding 5.00. However, the MKC and SBUX options trades do not. I'm OK with it if a few put options don't quite live up to my expectations. The options income makes up for the shortfall!

A Spread Trade


In June, I executed another trade based on a recommendation of one of my advanced options trading advisories.

The trade delivers 39% up front on margin and has a chance of returning 100% or more (on margin) over the next two years. Here is the trade:

#2102018-06-20:-3×GIS 17 Jan 2020 $42.50 P $ 1,224.00 ( $     -1.49 )
#2092018-06-20:  3×GIS 17 Jan 2020 $60.00 C $        0.00 ( $ -235.46 )

Founded in 1928 and based in Minneapolis, Minnesota, General Mills (GIS) is a global manufacturer and marketer of branded consumer foods sold through retail stores. The company supplies branded and unbranded food products to the foodservice and commercial baking industries.

GIS generates nearly $16 billion in annual sales and has many notable brands, including Cheerios, Pillsbury, Betty Crocker, Green Giant, Nature Valley, Yoplait, and Häagen-Dazs.

Here are the possible outcomes of the trade:
  1. GIS trades for less than $42.50 per share. The $60 calls expire worthless. The $42.50 puts are in the money and would be exercised, meaning I'll buy GIS for $42.50 per share. When accounting for the net credit of $3.29 per share, my cost basis would be $39.21 per share. 
  2. GIS trades between $42.50 and $60 per share. In this case, both options will expire worthless, and I would keep the $3.29 per share premium, or $987, which is a 39% return on margin in about 19 months. 
  3. GIS trades for more than $60 per share. This outcome is the best case scenario. The higher GIS goes above $60 per share, the higher my returns will be. For example, if GIS rises to $65 per share, the calls would be worth $5 per share, or $8.29 per share when adding the net options premium. That's a return of about 98% on margin.


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
#2122018-06-20:-2×SBUX 17 Jan 2020 $50.00 P $       915.00 ( $          -2.57 )$    32,670.92 ➤ $      5,107.92 
#2112018-06-20:-1×HSY 20 Jul 2018 $92.00 P $       194.00 ( $          -0.79 )$    31,758.49 ➤ $      5,110.49 
#2102018-06-20:-3×GIS 17 Jan 2020 $42.50 P $    1,224.00 ( $          -1.49 )$    31,565.28 ➤ $      5,111.28 
#2092018-06-20:  3×GIS 17 Jan 2020 $60.00 C $           0.00 ( $      -235.46 )$    30,342.77 ➤ $      5,112.77 
#2082018-06-14:-2×TGT 19 Oct 2018 $70.00 P $       355.00 ( $          -0.81 )$    30,578.23 ➤ $      5,348.23 
#2072018-06-14:-3×NKE 19 Oct 2018 $65.00 P $       264.00 ( $          -0.96 )$    30,224.04 ➤ $      5,349.04 
#2062018-06-14:-20×F 18 Jan 2019 $12.00 C $    1,383.00 ( $        -15.81 )$    29,961.00 ➤ $      5,350.00 
#2052018-06-14:-2×WBA 19 Oct 2018 $70.00 C $       288.00 ( $          -0.98 )$    28,593.81 ➤ $      5,365.81 
#2042018-06-14:-1×TSM 18 Jan 2019 $45.00 C $         55.00 ( $          -0.34 )$    28,306.79 ➤ $      5,366.79 
#2032018-06-14:-1×TRV 19 Oct 2018 $140.00 C $       124.00 ( $          -1.09 )$    28,252.13 ➤ $      5,367.13 
#2022018-06-14:-1×TJX 19 Oct 2018 $105.00 C $         90.00 ( $          -0.34 )$    28,129.22 ➤ $      5,368.22 
#2012018-06-14:-1×T 19 Oct 2018 $36.00 C $         94.00 ( $          -1.58 )$    28,039.56 ➤ $      5,368.56 
#2002018-06-14:-1×RDS.B 18 Jan 2019 $80.00 C $       115.00 ( $          -0.34 )$    27,947.14 ➤ $      5,370.14 
#1992018-06-14:-2×PG 19 Oct 2018 $85.00 C $         74.00 ( $          -0.98 )$    27,832.48 ➤ $      5,370.48 
#1982018-06-14:-1×LOW 18 Jan 2019 $120.00 C $       110.00 ( $          -0.79 )$    27,759.46 ➤ $      5,371.46 
#1972018-06-14:-1×JNJ 21 Dec 2018 $135.00 C $       150.00 ( $          -1.09 )$    27,650.25 ➤ $      5,372.25 
#1962018-06-14:-2×GILD 16 Nov 2018 $85.00 C $       166.00 ( $          -1.58 )$    27,501.34 ➤ $      5,373.34 
#1952018-06-14:-2×DIS 19 Oct 2018 $125.00 C $       116.00 ( $          -1.58 )$    27,336.92 ➤ $      5,374.92 
#1942018-06-14:-2×CMCSA 17 Aug 2018 $35.00 C $       164.00 ( $          -1.58 )$    27,222.50 ➤ $      5,376.50 
#1932018-06-14:-1×BUD 21 Dec 2018 $115.00 C $         85.00 ( $          -0.79 )$    27,060.08 ➤ $      5,378.08 
#1922018-06-14:-1×AAPL 20 Jul 2018 $200.00 C $       122.00 ( $          -1.09 )$    26,975.87 ➤ $      5,378.87 
#1912018-06-12:-2×TPR 20 Jul 2018 $45.00 P $       140.00 ( $          -1.58 )$    26,854.96 ➤ $      5,379.96 
#1902018-06-12:-1×MKC 21 Sep 2018 $100.00 P $       185.00 ( $          -0.24 )$    26,716.54 ➤ $      5,381.54 
#1892018-06-12:-2×AEO 17 Aug 2018 $24.00 P $       180.00 ( $            0.00 )$    26,531.78 ➤ $      5,381.78 
#1882018-05-24:-2×WSM 17 Aug 2018 $47.50 P $       240.00 ( $          -0.08 )$    26,351.78 ➤ $      5,381.78 
#1872018-05-24:-2×TJX 19 Oct 2018 $82.50 P $       380.00 ( $          -0.08 )$    26,111.86 ➤ $      5,381.86 
#1862018-05-24:-2×TGT 20 Jul 2018 $67.50 P $       224.00 ( $        -32.79 )→ #208$    25,731.94 ➤ $      5,381.94 
#1852018-05-24:-2×HSY 15 Jun 2018 $91.00 P $       236.00 ( $          -0.74 )$    25,540.73 ➤ $      5,190.73 
#1842018-05-11:-1×WMT 21 Jun 2019 $82.50 P $       667.00 ( $          -0.64 )$    25,305.47 ➤ $      4,955.47 
#1832018-05-11:-1×VLO 17 Jan 2020 $90.00 C $    2,935.00 ( $          -0.69 )$    24,639.11 ➤ $      4,956.11 
#1822018-05-11:-1×PG 17 Jan 2020 $72.50 P $       633.00 ( $          -0.63 )$    21,704.80 ➤ $      4,956.80 
#1812018-05-11:-1×MO 21 Jul 2019 $55.00 P $       579.00 ( $          -0.63 )$    21,072.43 ➤ $      4,957.43 
#1802018-05-11:-3×GPS 21 Dec 2018 $29.00 P $       912.00 ( $          -1.45 )$    20,494.06 ➤ $      4,958.06 
#1792018-05-11:-2×DIS 17 Jan 2020 $100.00 P $    1,845.00 ( $          -1.15 )$    19,583.51 ➤ $      4,959.51 
#1782018-05-11:  2×DIS 17 Jan 2020 $130.00 C $           0.00 ( $      -712.11 )$    17,739.66 ➤ $      4,960.66 
#1772018-04-20:-3×GLW 18 Jan 2019 $27.00 P $       618.00 ( $          -0.97 )$    18,451.77 ➤ $      5,672.77 
#1762018-04-20:-1×PG 18 Jan 2019 $77.50 P $       627.00 ( $      -672.25 )→ #182$    17,834.74 ➤ $      5,673.74 
#1752018-04-20:-1×MO 20 Jul 2018 $60.00 P $       438.00 ( $      -505.25 )→ #181$    17,879.99 ➤ $      5,718.99 
#1742018-04-20:-3×KBH 18 Jan 2019 $30.00 P $    1,494.00 ( $          -1.46 )$    17,947.24 ➤ $      5,786.24 
#1732018-04-06:-1×WMT 18 May 2018 $87.50 P $       304.00 ( $      -508.25 )→ #184$    16,454.70 ➤ $      5,787.70 
#1722018-04-06:-2×DIS 18 May 2018 $110.00 C $       116.00 ( $          -1.38 )$    16,658.95 ➤ $      5,991.95 
#1712018-03-23:-3×XLRE 18 May 2018 $29.00 P $       120.00 ( $          -0.18 )$    16,544.33 ➤ $      5,877.33 
#1702018-03-23:-2×APC 18 May 2018 $57.50 P $       290.00 ( $          -0.99 )$    16,424.51 ➤ $      5,757.51 
#1692018-03-22:-3×PFE 18 May 2018 $34.00 P $       141.00 ( $          -1.47 )$    16,135.50 ➤ $      5,468.50 
#1682018-03-22:-3×GPS 18 May 2018 $31.00 P $       447.00 ( $      -551.90 )→ #180$    15,995.97 ➤ $      5,328.97 
#1672018-03-14:-6×WEN 18 May 2018 $16.00 P $       270.00 ( $          -0.25 )$    16,100.87 ➤ $      5,433.87 
#1662018-03-14:-2×STLD 18 May 2018 $46.00 P $       410.00 ( $          -0.69 )$    15,831.12 ➤ $      5,164.12 
#1652018-03-14:-1×RS 20 Apr 2018 $87.50 P $       170.00 ( $          -0.34 )$    15,421.81 ➤ $      4,754.81 
#1642018-03-14:-3×PFE 15 Jun 2018 $34.00 P $       150.00 ( $          -1.47 )$    15,252.15 ➤ $      4,585.15 
#1632018-03-14:10×NEE 20 Apr 2018 $150.00 P $           0.00 ( $   -1,055.63 )$    15,103.62 ➤ $      4,436.62 
#1622018-03-14:-10×NEE 20 Apr 2018 $155.00 P $    2,153.00 ( $          -5.70 )$    16,159.25 ➤ $      5,492.25 
#1612018-03-14:-2×KMB 17 Jan 2020 $100.00 P $    1,503.00 ( $          -0.11 )$    14,011.95 ➤ $      3,344.95 
#1602018-03-14:  2×KMB 17 Jan 2020 $135.00 C $           0.00 ( $      -783.14 )$    12,509.06 ➤ $      3,345.06 
#1592018-03-14:-2×HOG 18 May 2018 $40.00 P $       186.00 ( $          -0.98 )$    13,292.20 ➤ $      4,128.20 
#1582018-03-14:-3×GLW 20 Apr 2018 $29.00 P $       141.00 ( $      -465.32 )→ #177$    13,107.18 ➤ $      3,943.18 
#1572018-03-14:-1×BUD 18 May 2018 $105.00 P $       200.00 ( $          -0.79 )$    13,431.50 ➤ $      4,267.50 
#1562018-02-26:-2×ABBV 17 Jan 2020 $100.00 C $    5,508.00 ( $          -1.24 )$    13,232.29 ➤ $      4,068.29 
#1552018-02-26:-1×WMT 06 Apr 2018 $90.00 P $       130.00 ( $      -221.61 )→ #173$      7,725.53 ➤ $      4,069.53 
#1542018-02-26:-1×LOW 20 Apr 2018 $92.50 P $       196.00 ( $          -0.79 )$      7,817.14 ➤ $      4,161.14 
#1532018-02-26:  5×HD 20 Apr 2018 $185.00 P $           0.00 ( $   -4,827.70 )$      7,621.93 ➤ $      3,965.93 
#1522018-02-26:-5×HD 20 Apr 2018 $190.00 P $    3,450.00 ( $          -2.79 )$    12,449.63 ➤ $      8,793.63 
#1512018-02-23:-2×SBUX 18 May 2018 $52.50 P $       194.00 ( $          -0.98 )$      9,002.42 ➤ $      5,346.42 
#1502018-02-23:-1×PG 20 Apr 2018 $80.00 P $       171.00 ( $      -562.41 )→ #176$      8,809.40 ➤ $      5,153.40 
#149b2018-02-23:-1×MO 20 Apr 2018 $60.00 P $         72.00 ( $      -267.16 )→ #175$      9,200.81 ➤ $      5,544.81 
#149a2018-02-23:-1×MO 20 Apr 2018 $60.00 P $         72.00 ( $          -0.54 )$      9,395.97 ➤ $      5,739.97 
#1482018-02-23:-2×HRL 15 Jun 2018 $32.50 P $       304.00 ( $          -0.01 )$      9,324.51 ➤ $      5,668.51 
#1472018-02-23:-2×EEM 18 May 2018 $46.00 P $       156.00 ( $          -2.42 )$      9,020.52 ➤ $      5,364.52 
#1462018-02-23:-2×DIS 06 Apr 2018 $112.00 C $       142.00 ( $          -0.74 )$      8,866.94 ➤ $      5,210.94 
#1452018-02-23:-3×BAC 18 May 2018 $29.00 P $       150.00 ( $          -1.47 )$      8,725.68 ➤ $      5,069.68 
#1442018-02-23:-2×AAPL 18 May 2018 $155.00 P $       374.00 ( $          -2.43 )$      8,577.15 ➤ $      4,921.15 
#1432018-02-16:-3×NKE 20 Jul 2018 $60.00 P $       441.00 ( $        -20.73 )→ #207$      8,205.58 ➤ $      4,549.58 
#1422018-02-16:-2×GILD 15 Jun 2018 $85.00 C $       678.00 ( $        -11.15 )$      7,785.31 ➤ $      4,129.31 
#1412018-01-12:  6×WYNN 16 Mar 2018 $155.00 P $           0.00 ( $   -2,708.04 )$      7,118.46 ➤ $      3,462.46 
#1402018-01-12:-6×WYNN 16 Mar 2018 $160.00 P $    3,791.00 ( $          -3.14 )$      9,826.50 ➤ $      6,170.50 
#1392018-01-12:  6×RL 20 Apr 2018 $100.00 P $           0.00 ( $   -2,427.25 )$      6,038.64 ➤ $      2,382.64 
#1382018-01-12:-6×RL 20 Apr 2018 $105.00 P $    3,566.00 ( $          -3.34 )$      8,465.89 ➤ $      4,809.89 
#1372018-01-12:  8×JPM 16 Mar 2018 $105.00 P $           0.00 ( $      -842.23 )$      4,903.23 ➤ $      1,247.23 
#1362018-01-12:-8×JPM 16 Mar 2018 $110.00 P $    1,864.00 ( $        -10.29 )$      5,745.46 ➤ $      2,089.46 
#1352018-01-12:-3×KSS 16 Mar 2018 $55.00 P $       405.00 ( $          -0.14 )$      3,891.75 ➤ $         235.75 
#1342018-01-10:-4×QCOM 17 Jan 2020 $65.00 C $    3,140.00 ( $          -2.05 )$      3,486.89 ➤ $       -169.11 
#1332018-01-10:-20×F 17 Jan 2020 $12.00 C $    3,720.00 ( $   -2,558.96 )→ #206$         348.94 ➤ $       -167.06 
#1322018-01-10:-2×KO 18 Jan 2019 $47.00 C $       414.00 ( $      -109.56 )$        -812.10 ➤ $     -1,328.10 
#1312018-01-10:-3×TGT 16 Mar 2018 $60.00 P $       144.00 ( $          -1.48 )$     -1,116.54 ➤ $     -1,632.54 
#1302018-01-10:-3×KBH 20 Apr 2018 $31.00 P $       306.00 ( $   -1,283.91 )→ #174$     -1,259.06 ➤ $     -1,775.06 
#1292018-01-10:-2×FAST 18 May 2018 $50.00 P $       350.00 ( $            0.00 )$        -281.15 ➤ $        -797.15 
#1282018-01-10:-1×AXP 20 Apr 2018 $100.00 P $       330.00 ( $          -0.80 )$        -631.15 ➤ $     -1,147.15 
#1272017-11-30:-2×EEM 19 Jan 2018 $46.00 P $       234.00 ( $          -0.85 )$        -960.35 ➤ $     -1,476.35 
#1262017-11-30:-2×BBT 16 Mar 2018 $50.00 P $       130.00 ( $          -0.98 )$     -1,193.50 ➤ $     -1,709.50 
#1252017-11-21:-3×X 19 Jan 2018 $26.00 P $       252.00 ( $          -2.09 )$     -1,322.52 ➤ $     -1,838.52 
#1242017-11-21:-2×RL 19 Jan 2018 $80.00 P $       150.00 ( $          -0.09 )$     -1,572.43 ➤ $     -2,088.43 
#1232017-11-21:-3×BAC 19 Jan 2018 $25.00 P $       120.00 ( $          -2.23 )$     -1,722.34 ➤ $     -2,238.34 
#1222017-11-17:-1×VLO 18 Jan 2019 $80.00 C $       892.00 ( $   -3,535.26 )→ #183$     -1,840.11 ➤ $     -2,356.11 
#1212017-11-17:-3×NKE 20 Apr 2018 $50.00 P $       208.00 ( $        -31.15 )→ #143$         803.15 ➤ $         287.15 
#1202017-11-17:-2×AAPL 16 Feb 2018 $150.00 P $       376.00 ( $          -1.60 )$         626.30 ➤ $         110.30 
#1192017-11-17:-2×WBA 15 Dec 2017 $70.00 P $       244.00 ( $          -0.99 )$         251.90 ➤ $       -264.10 
#1182017-11-17:-2×TXN 16 Mar 2018 $85.00 P $       200.00 ( $          -0.99 )$             8.89 ➤ $       -507.11 
#1172017-11-17:-2×MO 19 Jan 2018 $62.50 P $       140.00 ( $          -0.99 )$        -190.12 ➤ $        -706.12 
#116b2017-10-20:-1×INTC 17 Jan 2020 $40.00 C $       516.00 ( $   -1,691.18 )$        -329.13 ➤ $        -845.13 
#116a2017-10-20:-1×INTC 17 Jan 2020 $40.00 C $       516.00 ( $          -0.51 )$         846.04 ➤ $         330.04 

key:
  expired  •  closed  •  rolled  •  assigned  •  open 

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

Conclusion


While I made some progress by securing $2,515 in options income in June, the road to my target of $23,420 remains steep! We'll see how the second half of 2018 goes...


Total
Options Income
Secured
Options Income
This Month:
$ 32,671$     5,108
Last Month:
$ 29,052$     2,593
Difference:
$   3,619$     2,515

Thanks for reading and take care, everybody!


2 comments :

  1. Fantastic work. This is a lot to go through but wow thanks for sharing such a lot of information with us. I appreciate it.

    ReplyDelete
    Replies
    1. Thanks for your kind words! June was a busy month! I haven't done much in July yet, so the next options update will be shorter...

      Delete

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