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Monday, January 24, 2022

Expired Options (January 2022)

I skipped posting articles about my options trading in December, choosing to take a break and reset things in 2022. 

Having failed to achieve my options income goal for 2021, I set a more modest options income goal for 2022, aiming to collect a total of $12,000 in options income by year's end. 

The market is quite volatile, with inflation concerns, upcoming interest rate hikes, and geopolitical tensions cycling as reasons for concern. Selling options can be quite lucrative in a volatile environment, but the accompanying risk should be managed carefully. 

In this article, I'm covering the options that were scheduled to expire on 21 January 2022. 

Introduction


When options expire, the obligations I have related to those options disappear. 

For covered calls, the possibility that my shares will be called away disappears. Likewise, for puts, the margin that was aside as collateral is released, and the possibility of having to buy shares disappears. I consider the options income associated with expired options to be secured

As the expiration date approaches, at-the-money or in-the-money options have increased assignment risk, so I either close or roll forward such options to a later expiration date.

Expired Options


#7152021-09-17:-1×RY 21 Jan 2022 $90.00 P $       125.00 ( $          -0.30 )
#7092021-09-17:-2×ENB 21 Jan 2022 $35.00 P $       100.00 ( $          -0.29 )
#7072021-09-17:-2×AFL 21 Jan 2022 $47.50 P $       180.00 ( $          -0.41 )
#7062021-09-16:-1×VZ 15 Jul 2022 $52.50 P $       328.00 ( $          -0.71 )
#7022021-08-19:-2×WEC 21 Jan 2022 $85.00 P $       272.00 ( $          -0.61 )
#7012021-08-19:-1×RTX 21 Jan 2022 $80.00 P $       430.00 ( $          -0.71 ) 
#6972021-08-19:  1×ADP 21 Jan 2022 $210.00 C $    1,060.00 ( $          -0.66 )
#6602021-05-17:-2×ADM 21 Jan 2022 $65.00 C $    1,240.00 ( $          -0.70 )

Royal Bank of Canada (RY) closed at $114.87 per share on options expiration day, about 28% above the $90 put option I'd sold. As a result, the option expired and I secured about $125 in options income. 

Enbridge (ENB) closed at $40.81 per share on options expiration day, about 17% above the $35 put options I'd sold. As a result, the options expired and I secured about $100 in options income. 

Aflac (AFL) closed at $60.86 per share on options expiration day, about 28% above the $47.50 put option I'd sold. As a result, the option expired and I secured about $180 in options income. 

Verizon Communications (VZ) closed at $53.16 per share on options expiration day, about 1% above the $52.50 put option I'd sold. As a result, the option expired and I secured about $327 in options income. 

WEC Energy (WEC) closed at $96.99 per share on options expiration day, about 14% above the $85 put options I'd sold. As a result, the options expired and I secured about $271 in options income. 

Raytheon Technologies (RTX) closed at $87.21 per share on options expiration day, about 9% above the $80 put option I'd sold. As a result, the option expired and I secured about $429 in options income. 

As a result of these expirations, I secured options income totaling about $1,432. 

Automatic Data Processing (ADP) was trading above $220 per share one day before options expiration day. Being in the money, the $210 covered call option I'd sold likely would have been assigned. So I decided to roll forward the $210 covered call expiring on 21 January 2022 to the $230 covered call expiring on 20 January 2023:

ADP 21JAN22 210.0 C2022-01-201-1,803.00-0.64
C
ADP 20JAN23 230.0 C2022-01-20-12,078.00-0.65
O

 The trade netted $273.71 in options income. 

Archer-Daniels-Midland (ADM) was trading above $68 per share one day before options expiration day. Being in the money, the $65 covered call options I'd sold likely would have been assigned. So I decided to roll forward the $65 covered calls expiring on 21 January 2022 to the $72.50 covered calls expiring on 20 January 2023:

ADM 21JAN22 65.0 C2022-01-202
-1,162.00-0.58C
ADM 20JAN23 72.5 C2022-01-20-2
1,138.00-0.59
O

The trade netted a loss of $25.17 in options income. 

Summary


All the put options that were scheduled to expire on 21 January, expired out of the money. 

Two covered call options traded in the money and I elected to roll forward those covered calls to next January's expiration date. In the process, I increased the strike prices by 9.5% (ADP) and 11.5% (for ADM) to give the stock prices of the underlying stocks some room to increase.

Soon, I'll publish another Options Update article to report on January's other options trades.

Thanks for reading!
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