I'm trying to catch up on my options articles. I just posted an update covering February's trades and hope to post one for March soon.
Because my options trading has increased over the last year or so, I've split my reporting up into two monthly articles, one shortly after options expiration day, covering expired options, and one after month's end, covering the remaining options trades.
This article covers the options that were scheduled to expire on 19 March. Most of them expired, but two were assigned just prior to or on options expiration day.
When options expire, the obligations I have related to those options cease to exist. For puts, there no longer is a chance that I would have to buy shares, and the margin that was set aside as collateral gets released. For covered calls, there no longer is a chance that my shares will be called away. I consider the options income associated with expired options to be secured.Recap
Here is a summary of the options that were scheduled for expiration on 19 March:
March 2021:
| ID | DATE | : | NO | × | TICKER OPTION | INCOME | ( EXPENSES ) | |||
| #616 | 2021-01-15 | : | -1 | × | LOW 19 Mar 2021 $180.00 C | $ 453.00 | ( $ -0.65 ) | |||
| #612 | 2020-12-18 | : | -3 | × | XEL 19 Mar 2021 $55.00 P | $ 135.00 | ( $ -0.04 ) | |||
| #605 | 2020-12-18 | : | -1 | × | PM 19 Mar 2021 $90.00 C | $ 193.00 | ( $ -0.64 ) | |||
| #603 | 2020-12-18 | : | -3 | × | PFE 19 Mar 2021 $50.00 C | $ 108.00 | ( $ -2.21 ) | |||
| #597 | 2020-12-18 | : | -1 | × | MCD 19 Mar 2021 $180.00 P | $ 145.00 | ( $ -0.79 ) | |||
| #596 | 2020-12-18 | : | -2 | × | LYB 19 Mar 2021 $65.00 P | $ 190.00 | ( $ -0.12 ) | |||
| #593 | 2020-12-18 | : | -3 | × | KO 19 Mar 2021 $60.00 C | $ 99.00 | ( $ -1.31 ) | |||
| #591 | 2020-12-18 | : | -2 | × | ITW 19 Mar 2021 $145.00 P | $ 150.00 | ( $ -0.13 ) | |||
| #587 | 2020-12-18 | : | -2 | × | EMR 19 Mar 2021 $60.00 P | $ 94.00 | ( $ -0.87 ) | |||
| #571 | 2020-12-11 | : | -2 | × | SBUX 19 Mar 2021 $85.00 P | $ 214.00 | ( $ -1.28 ) | |||
| #568 | 2020-12-11 | : | -1 | × | MMM 19 Mar 2021 $150.00 P | $ 260.00 | ( $ -0.64 ) | |||
| #567 | 2020-12-11 | : | -1 | × | JNJ 19 Mar 2021 $130.00 P | $ 155.00 | ( $ -0.64 ) | |||
| #565 | 2020-12-11 | : | -2 | × | ICE 19 Mar 2021 $95.00 P | $ 316.00 | ( $ -1.38 ) | |||
| #563 | 2020-12-11 | : | -2 | × | CMCSA 19 Mar 2021 $45.00 P | $ 216.00 | ( $ -0.73 ) | |||
| #562 | 2020-12-11 | : | -4 | × | AAPL 19 Mar 2021 $85.00 P | $ 269.00 | ( $ -1.50 ) | |||
| #560 | 2020-11-30 | : | -1 | × | TXN 19 Mar 2021 $125.00 P | $ 164.00 | ( $ -0.79 ) | |||
| #556 | 2020-11-30 | : | -1 | × | IBM 18 Mar 2021 $140.00 C | $ 155.00 | ( $ -1.09 ) | |||
| #553 | 2020-11-30 | : | -2 | × | CSCO 19 Mar 2021 $45.00 C | $ 270.00 | ( $ -0.64 ) |
Assigned Options
Philip Morris International Inc (PM) closed at $90.56 per share on 18 March, one day before the options expiration day. As it turns out, 18 March was also the day before PM's ex-dividend date.
The option holder decided to exercise the $90 put option I'd sold, so my shares were called away, along with $120 in dividends I would have received as the owner. Too bad, but that's the risk I take for selling covered calls on dividend growth stocks.
I'm not too unhappy, though. I secured about $192 in options income for a trade that lasted about three months (or one quarter). That's 60% higher than PM's quarterly dividend! While PM yielded 5.37% at assignment, the options trade yielded 8.48% on an annualized basis! Not bad!
PM is trading for about $89 per share.
Cisco Systems, Inc (CSCO) closed at $48.98 per share on options expiration day, about 8% above the $45 covered calls I'd sold.
As a result, the options were assigned and 200 of my CSCO shares were called away. In the process, I secured about $269 in options income for a trade lasting 3.5 months. While CSCO's yield was 3.02% at assignment, the annualized yield of this options trade was 9.22%! Again, not bad!
CSCO is trading around $52 per share.
As a result of these assignments, I secured options income totaling about $461.
Expired Options
The remaining options (16 of them) all expired, as did my obligations related to those options.
Lowe's Companies, Inc (LOW) closed at $179.49 per share on options expiration day, just below the $180 covered call I'd sold. As a result, the option expired and I secured about $452 in options income.
LOW is trading for about $191 per share.
Xcel Energy Inc (XEL) closed at $62.99 per share on options expiration day, about 15% above the $55 put option I'd sold. As a result, the option expired and I secured about $135 in options income.
XEL is trading at around $66 per share.
Pfizer Inc (PFE) closed at $60.86 per share on options expiration day, about 29% below the $50 covered calls I'd sold. As a result, the options expired and I secured about $106 in options income.
PFE is trading for about $36 per share.
McDonald's Corporation (MCD) closed at $222.44 per share on options expiration day, about 24% above the $180 put I'd sold. As a result, the option expired and I secured about $144 in options income.
MCD is trading around $224 per share.
LyondellBasell Industries NV (LYB) closed at $106.77 per share on options expiration day, some 64% above the $65 puts I'd sold. As a result, the options expired and I secured about $190 in options income.
LYB is trading for about $104 per share.
The Coca-Cola Company (KO) closed at $50.81 per share on options expiration day, about 15% below the $60 covered call options I'd sold. As a result, the options expired and I secured about $98 in options income.
KO is trading at around $53 per share.
Illinois Tool Works Inc (ITW) closed at $217.59 per share on options expiration day, about 50% above the $145 covered calls I'd sold. As a result, the options expired and I secured about $150 in options income.
ITW is trading for about $222 per share.
Emerson Electric Co (EMR) closed at $88.49 per share on options expiration day, about 47% above the $60 puts I'd sold. As a result, the options expired and I secured about $93 in options income.
EMR is trading around $90 per share.
Starbucks Corporation (SBUX) closed at $106.34 per share on options expiration day, some 25% above the $85 puts I'd sold. As a result, the options expired and I secured about $213 in options income.
SBUX is trading for about $109 per share.
3M Company (MMM) closed at $188.71 per share on options expiration day, about 26% above the $150 put option I'd sold. As a result, the option expired and I secured about $259 in options income.
MMM is trading for about $193 per share.
Johnson & Johnson (JNJ) closed at $160.04 per share on options expiration day, about 23% above the $130 put option I'd sold. As a result, the option expired and I secured about $154 in options income.
JNJ is trading at around $165 per share.
Intercontinental Exchange, Inc (ICE) closed at $111.20 per share on options expiration day, about 17% above the $95 put options I'd sold. As a result, the options expired and I secured about $315 in options income.
ICE is trading for about $112 per share.
Comcast Corporation (CMCSA) closed at $55.46 per share on options expiration day, about 23% above the $45 put options I'd sold. As a result, the options expired and I secured about $215 in options income.
CMCSA is trading around $54 per share.
Apple Inc (AAPL) closed at $119.99 per share on options expiration day, about 41% above the $85 put options I'd sold. As a result, the options expired and I secured about $267 in options income.
AAPL is trading for about $122 per share.
Texas Instruments Incorporated (TXN) closed at $175.98 per share on options expiration day, about 41% above the $125 put option I'd sold. As a result, the option expired and I secured about $163 in options income.
TXN is trading at around $189 per share.
International Business Machines Corporation (IBM) closed at $128.90 per share on options expiration day, about 8% below the $140 covered call I'd sold. As a result, the option expired and I secured about $154 in options income.
IBM is trading for about $133 per share.
As a result of these expirations, I secured options income totaling about $3,254.
Summary
Of the 18 short options that were scheduled to expire on 19 March, two were assigned and sixteen expired. As a result, I secured options income totaling about $3,715 and I no longer have any related obligations. For puts, the margin that was set aside as collateral is released, and for covered calls, my shares no longer can be called away.
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What would be great is if for the options posts if you included the new options entered into i.e. for this article what new options after the expiration but before the article was written. Don't need a lot of info just option and your reasoning, i.e. for puts good yield and you get to buy below your fair value. For calls strictly income generation or if call were exercised it would be above what your considered fair value.
ReplyDeleteInteresting idea, but not something I'll likely do. My main focus is on dividend growth investing, not options. I write these options articles mostly to keep track of options income, which I redeploy to buy dividend growth [DG] stocks. My articles on SA and here reveal my opinions of FVs of DG stocks. Selling puts at or below FV is one way to ensure decent entry points. I sometimes set my put strikes even lower (say 10-20%) than FV. If these puts expire, I'm fine with it. If they get assigned, I have a great entry point!
DeleteCovered calls is another matter altogether. I've been assigned a few times when I was hoping not to, mostly around ex-dates because the call holder wants the dividend. That's unfortunate but still OK, because I usually earn more in options income than I would give up in dividend income.
Perhaps one day (if there is sufficient interest) I'll create a subscription service for options trading on dividend growth stocks. That way, the subscribers can benefit directly from options trading ideas and/or learn what to look for.