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Friday, July 23, 2021

Options Update: June 2021 (Part 1)

I've fallen behind on updating readers on my options trades. Work obligations and family matters have made it hard to keep up, so I'm foregoing June and July's Expired Options articles. But here, finally, is June's Options Update article!

In May I added only $501 to my options income tally, bringing the year-to-date total to $5,177. Given my goal of collecting $24,000 in 2021, this put me far behind the pace needed to achieve my options income goal.  

Fortunately, June was a great month and I made up some lost ground! In Part 1, I'll cover assignments, expirations and closed options, and I'll provide a listing of options expiring in the next two months. Part 2 will cover rolled options and put options trades that generated income in June. 

Recap


In June, I had one assignment, 18 expirations, and four options that I'd closed early. Additionally, I rolled forward three options and wrote 23 put options to generate additional options income:



Assigned Options


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

I had one assignment in June:

#6682021-05-17:-1×TSN 18 Jun 2021 $80.00 P $       225.00 ( $          -1.09 )
 

On 16 June, Tyson Foods, Inc (TSN) traded around $74 per share, well below the $80 put option I'd sold. The option was assigned and I had to buy 100 shares of TSN at $80 per share. Effectively, I paid $77.50 per share, so this trade turned out to be a dud.

With the removal of my obligation to buy shares, I secured $224 in options income.

Expired Options


In June, the following option expired:

#6642021-05-17:-1×HRL 18 Jun 2021 $45.00 P $         60.00 ( $          -0.29 )
#6422021-04-15:-2×GILD 18 Jun 2021 $57.50 P $       126.00 ( $          -0.87 ) 
#6412021-04-15:-1×BMY 18 Jun 2021 $65.00 P $       236.00 ( $          -0.79 ) 
#6392021-04-15:-2×AAPL 18 Jun 2021 $105.00 P $       110.00 ( $          -0.63 )
#6382021-04-07:-1×VLO 18 Jun 2021 $70.00 P $       358.00 ( $          -1.09 )
#6352021-03-16:-3×XEL 18 Jun 2021 $55.00 P $       195.00 ( $          -0.34 ) 
#6322021-03-16:-1×SYK 18 Jun 2021 $200.00 P $       220.00 ( $          -0.24 ) 
#6312021-03-16:-1×RTX 18 Jun 2021 $75.00 P $       340.00 ( $          -0.66 ) 
#6302021-03-16:-2×QCOM 18 Jun 2021 $100.00 P $       208.00 ( $          -0.88 )
#6232021-03-16:-1×HRL 18 Jun 2021 $45.00 P $       120.00 ( $          -0.34 ) 
#6222021-03-16:-1×EMR 18 Jun 2021 $85.00 P $       320.00 ( $          -0.66 ) 
#6182021-03-16:-1×APD 18 Jun 2021 $240.00 P $       450.00 ( $          -0.25 )
#6132020-12-30:-1×HRL 18 Jun 2021 $52.50 C $         83.00 ( $          -1.09 ) 
#6112020-12-18:-1×WMT 18 Jun 2021 $120.00 P $       224.00 ( $          -0.79 )
#6092020-12-18:-1×V 18 Jun 2021 $160.00 P $       260.00 ( $          -0.79 ) 
#5842020-12-18:-2×CMCSA 18 Jun 2021 $60.00 C $       196.00 ( $          -0.73 ) 
#5662020-12-11:-1×INTC 18 Jun 2021 $60.00 C $       143.00 ( $          -0.64 ) 
#5642020-12-11:-1×HRL 18 Jun 2021 $52.50 C $       108.00 ( $          -0.69 ) 

After options expiration day, I usually write an Expired Options article to report what happened. But I did not write one in June, so let's cover the details of these expirations here: 

Hormel Foods Corporation (HRL) closed at $47.42 per share on options expiration day, about 5% above the $45 put options I'd sold. As a result, the option expired and I secured about $60 and $120 in options income. 

Gilead Sciences, Inc (GILD) closed at $66.61 per share on options expiration day, about 5% above the $57.50 put options I'd sold. As a result, the options expired and I secured about $125 in options income. 

Bristol-Myers Squibb Company (BMY) closed at $66.47 per share on options expiration day, about 2% above the $65 put option I'd sold. As a result, the option expired and I secured about $235 in options income.

Apple Inc (AAPL) closed at $130.46 per share on options expiration day, about 24% above the $105 put options I'd sold. As a result, the options expired and I secured about $109 in options income. 

Valero Energy Corporation (VLO) closed at $76.02 per share on options expiration day, about 9% above the $70 put option I'd sold. As a result, the option expired and I secured about $357 in options income. 

Xcel Energy Inc (XEL) closed at $66.60 per share on options expiration day, about 21% above the $55 put options I'd sold. As a result, the options expired and I secured about $195 in options income. 

Stryker Corporation (SYK) closed at $254.91 per share on options expiration day, about 27% above the $200 put option I'd sold. As a result, the option expired and I secured about $220 in options income. 

Raytheon Technologies Corporation (RTX) closed at $76.02 per share on options expiration day, about 15% above the $75 put option I'd sold. As a result, the option expired and I secured about $339 in options income. 

QUALCOMM Incorporated (QCOM) closed at $133.00 per share on options expiration day, about 33% above the $100 put options I'd sold. As a result, the options expired and I secured about $207 in options income. 

Emerson Electric Co (EMR) closed at $92.27 per share on options expiration day, about 9% above the $85 put option I'd sold. As a result, the option expired and I secured about $319 in options income. 

Air Products and Chemicals, Inc (APD) closed at $76.02 per share on options expiration day, about 22% above the $240 put option I'd sold. As a result, the option expired and I secured about $450 in options income. 

Hormel Foods Corporation (HRL) closed at $47.42 per share on options expiration day, about 10% below the $52.50 covered call I'd sold. As a result, the option expired and I secured about $82 and $107 in options income. 

Walmart Inc (WMT) closed at $135.17 per share on options expiration day, about 13% above the $120 put option I'd sold. As a result, the option expired and I secured about $223 in options income. 

Visa Inc (V) closed at $230.41 per share on options expiration day, about 44% above the $160 put option I'd sold. As a result, the option expired and I secured about $259 in options income. 

Comcast Corporation (CMCSA) closed at $56.71 per share on options expiration day, about 5% below the $60 covered calls I'd sold. As a result, the options expired and I secured about $195 in options income. 

Finally, Intel Corporation (INTC) closed at $55.67 per share on options expiration day, about 7% below the $60 covered call I'd sold. As a result, the option expired and I secured about $142 in options income. 

In all, I secured $3,744 in options income from expired options in June.

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. In the case of covered calls, you must close the calls if you want to sell the underlying shares before expiration. 

I closed the following options early in June.

#6282021-03-16:-3×NNN 18 Jun 2021 $35.00 P $       120.00 ( $        -15.92 )
#6272021-03-16:-2×NEE 18 Jun 2021 $65.00 P $       210.00 ( $        -10.60 ) 
#6262021-03-16:-1×KMB 16 Jul 2021 $120.00 P $       215.00 ( $          -5.95 )
#6252021-03-16:-2×ICE 18 Jun 2021 $95.00 P $       150.00 ( $        -10.41 )

On 1 June, National Retail Properties, Inc (NNN) traded around $47 per share, well above the $35 put options I'd sold. With most of the options income secured, I decided to buy back the puts. Doing so cost me about $16 and I secured about $104 in options income in the process. 

On 4 June, NextEra Energy, Inc (NEE) traded around $72 per share, well above the $65 put options I'd sold. With most of the options income secured, I decided to buy back the puts. Doing so cost me about $11 and I secured about $199 in options income in the process. 

On 25 June, Kimberly-Clark Corporation (KMB) traded around $133 per share, well above the $120 put option I'd sold. With most of the options income secured, I decided to buy back the put. Doing so cost me about $6 and I secured about $209 in options income in the process. 

Finally, On 7 June, Intercontinental Exchange, Inc (ICE) traded around $110 per share, well above the $95 put options I'd sold. With most of the options income secured, I decided to buy back the puts. Doing so cost me about $10 and I secured about $140 in options income in the process. 

In all, I secured $652 in options income buying back these puts.

Options Expiring Soon


Below I'm listing options expiring in the next two months. On expiration day, in the money options will result in options assignment, which I'd like to avoid in some cases, if possible.

August 2021:

#6902021-06-16:-1×WMT 20 Aug 2021 $130.00 P $       138.00 ( $          -0.76 ) → Out of the money with a  9% safety margin  
#6862021-06-16:-1×RTX 20 Aug 2021 $90.00 P $       410.00 ( $          -0.76 )→ In the money by  5% — caution!  
#6822021-06-16:-1×MCK 20 Aug 2021 $180.00 P $       370.00 ( $          -0.26 )→ Out of the money with a  12% safety margin  
#6792021-06-16:-2×GILD 20 Aug 2021 $70.00 P $       310.00 ( $          -0.64 )→ In the money by  2% — caution!  
#6762021-06-16:-1×CME 20 Aug 2021 $190.00 P $       125.00 ( $          -0.31 )→ Out of the money with a  11% safety margin  
#6752021-06-16:-2×BAX 20 Aug 2021 $75.00 P $       200.00 ( $          -0.08 )
→ Out of the money with a  8% safety margin  
#6722021-06-16:-2×AEP 20 Aug 2021 $77.50 P $       100.00 ( $          -0.08 )
→ Out of the money with a  10% safety margin  
 #6712021-06-16:-1×ACN 20 Aug 2021 $240.00 P $       160.00 ( $          -1.06 )
→ Out of the money with a  32% safety margin  
#6702021-06-16:-1×ABT 20 Aug 2021 $100.00 P $       108.00 ( $          -0.76 )→ Out of the money with a  20% safety margin  
#6632021-05-17:-1×DHI 20 Aug 2021 $90.00 P $       500.00 ( $          -0.80 ) → Out of the money with a  3% safety margin  
#6582021-04-20:-1×PSX 20 Aug 2021 $65.00 P $       250.00 ( $          -0.34 )→ Out of the money with a  11% safety margin  
#6572021-04-20:-1×IDA 20 Aug 2021 $85.00 P $       100.00 ( $          -0.24 ) → Out of the money with a  32% safety margin  
#6512021-04-16:-3×INTC 20 Aug 2021 $50.00 P $       201.00 ( $          -1.04 )
→ Out of the money with a  6% safety margin  
#6502021-04-16:-2×CL 20 Aug 2021 $70.00 P $       165.00 ( $          -0.13 )  → Out of the money with a  17% safety margin  
#6492021-04-16:-3×AFL 20 Aug 2021 $45.00 P $       142.00 ( $          -2.26 )→ Out of the money with a  19% safety margin  
#5772020-12-18:-1×ADP 20 Aug 2021 $200.00 C $       595.00 ( $          -0.70 )
→ Out of the money with a  3% safety margin  

September 2021:

#6922021-06-25:-1×PG 17 Sep 2021 $130.00 P $       285.00 ( $          -0.71 ) → Out of the money with a  6% safety margin  
#6892021-06-16:-1×VZ 17 Sep 2021 $57.50 P $       220.00 ( $          -0.76 ) → In the money by  3% — caution!  
#6882021-06-16:-1×SYK 17 Sep 2021 $230.00 P $       300.00 ( $          -0.31 ) → Out of the money with a  13% safety margin  
#6872021-06-16:-2×SCHW 17 Sep 2021 $65.00 P $       360.00 ( $          -0.82 ) → Out of the money with a  6% safety margin  
#6852021-06-16:-2×NEE 17 Sep 2021 $67.50 P $       200.00 ( $          -0.08 )  → Out of the money with a  13% safety margin  
#6832021-06-16:-2×MDLZ 17 Sep 2021 $57.50 P $       120.00 ( $          -0.18 ) → Out of the money with a  12% safety margin  
#6802021-06-16:-2×HRL 17 Sep 2021 $46.00 P $       198.00 ( $          -1.42 )
→ Out of the money with a  2% safety margin  
#6772021-06-16:-2×DLB 17 Sep 2021 $85.00 P $       190.00 ( $          -0.08 )→ Out of the money with a  15% safety margin  
#6742021-06-16:-1×APD 17 Sep 2021 $260.00 P $       190.00 ( $          -1.06 )  → Out of the money with a  11% safety margin  
#6692021-06-16:-2×AAPL 17 Sep 2021 $100.00 P $       116.00 ( $          -1.87 ) → Out of the money with a  48% safety margin  
#6672021-05-17:-1×PM 17 Sep 2021 $90.00 P $       250.00 ( $          -0.79 ) → Out of the money with a  6% safety margin  
#6652021-05-17:-2×PFE 17 Sep 2021 $42.00 P $       648.00 ( $          -0.74 ) → In the money by  1% — caution!  
#6532021-04-16:-2×PEG 17 Sep 2021 $55.00 P $       208.00 ( $          -1.92 ) → Out of the money with a  10% safety margin  
#6522021-04-16:-2×JNJ 17 Sep 2021 $130.00 P $       190.00 ( $          -0.69 ) → Out of the money with a  32% safety margin  
#6362021-04-01:-2×BNS 17 Sep 2021 $60.00 C $       767.00 ( $          -0.29 )  → In the money by  3% — caution! 

There are several options expiring on 20 August that would need careful attention. Two are in the money, while five are out of the money with small margins of safety. 

Concluding Remarks


June turned out to be a great month with lots of expirations, allowing me to secure $3,744 in options income. Additionally, I closed four options early, securing an additional $652 in options income. 

In Part 2 of this article, I'll report on my June trades that generated additional options income, including three trades in which I rolled forward options and 23 trades in which I wrote put options.

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