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Wednesday, September 29, 2021

Expired Options (September 2021)

Shortly after options expiration, I try to post an article to report on expired options and any actions I took in the week leading up to options expiration. 

The summer months have been busy and I didn't get around to doing this; instead, I covered expired options with my regular monthly Options Update articles. 

This article covers the options that were scheduled to expire on 17 September. 

When options expire, the obligations I have related to those options go away. For puts, the margin set aside as collateral gets released and the possibility of having to buy shares goes away. Likewise, for covered calls, the possibility that my shares will be called away goes away. I consider the options income associated with expired options to be secured

Sometimes, an option is at-the-money or even in-the-money, and, consequently, the risk of assignment is high. To avoid assignment, I'd need to either close the option or roll forward the option to a later expiration date. 

Recap


Here is a summary of the options that were scheduled for expiration on 17 September, as reported in my last Options Update article:

September 2021:

#7042021-08-31:-1×MO 17 Sep 2021 $51.00 P $       195.00 ( $          -0.71 )→ At the money  — caution! 
#6922021-06-25:-1×PG 17 Sep 2021 $130.00 P $       285.00 ( $          -0.71 )→ Out of the money with a  11% safety margin  
#6892021-06-16:-1×VZ 17 Sep 2021 $57.50 P $       220.00 ( $          -0.76 )→ In the money by  4% — caution! 
#6882021-06-16:-1×SYK 17 Sep 2021 $230.00 P $       300.00 ( $          -0.31 )→ Out of the money with a  20% safety margin  
#6872021-06-16:-2×SCHW 17 Sep 2021 $65.00 P $       360.00 ( $          -0.82 )→ Out of the money with a  11% safety margin 
#6832021-06-16:-2×MDLZ 17 Sep 2021 $57.50 P $       120.00 ( $          -0.18 )→ Out of the money with a  7% safety margin 
#6802021-06-16:-2×HRL 17 Sep 2021 $46.00 P $       198.00 ( $          -1.42 )→ In the money by  7% — caution!  
#6772021-06-16:-2×DLB 17 Sep 2021 $85.00 P $       190.00 ( $          -0.08 )→ Out of the money with a  14% safety margin  
#6742021-06-16:-1×APD 17 Sep 2021 $260.00 P $       190.00 ( $          -1.06 )→ Out of the money with a  3% safety margin 

Several of these options were in the money or out of the money with a small safety margin, so I either closed the options or rolled forward the options before expiration. As for the put option on Altria Group (MO), I decided to let it be assigned!

Following are the options that expired.

Expired Options


Stryker (SYK) closed at $273.03 per share on options expiration day, about 18% above the $230 put option I'd sold. As a result, the option expired and I secured about $300 in options income. 

Today, SYK is trading for about $265 per share.

Charles Schwab (SCHW) closed at $70.43 per share on options expiration day, about 8% above the $65 put options I'd sold. As a result, the options expired and I secured about $359 in options income. 

SCHW is trading at around $76 per share. 

Philip Morris International (PM) closed at $100.62 per share on options expiration day, about 12% above the $90 put option I'd sold. As a result, the option expired and I secured about $127 in options income. 

PM is trading for about $99 per share. 

Procter & Gamble (PG) closed at $144.34 per share on options expiration day, about 11% above the $130 put option I'd sold. As a result, the option expired and I secured about $284 in options income. 

PG is trading for about $142 per share. 

Mondelez International (MDLZ) closed at $60.94 per share on options expiration day, about 6% above the $57.50 put options I'd sold. As a result, the options expired and I secured about $120 in options income. 

MDLZ is trading for about $59 per share. 

Dolby Laboratories (DLB) closed at $93.30 per share on options expiration day, about 10% above the $85 put options I'd sold. As a result, the options expired and I secured about $189 in options income. 

Today’s, DLB is trading at around $89 per share. 

As a result of these expirations, I secured options income totaling about $1,379. 

Remaining Options


Here are the actions I took with regards to the remaining options:
  • Altria (MO) 17 Sep 2021 $51.00 P — none (allowed the option to be assigned)
  • Verizon Communications (VZ) 17 Sep 2021 $57.50 P — rolled forward
  • Hormel Foods (HRL) 17 Sep 2021 $46.00 P — closed
  • Air Products and Chemicals (APD) 17 Sep 2021 $260.00 P — closed
I will cover these actions in my upcoming Options Update article.

Summary


Of the options that were scheduled to expire on 17 September, six expired and I took early action on three additional options to avoid assignment. Moreover, I allowed one option to be assigned as I wanted to add 100 shares of MO to my existing holding. 


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