Well, the markets are on a tear. This has helped my puts become more profitable. I continue selling puts against companies I want to own more of and using proceeds to purchase more shares of these companies.
Below are all my trades since July of last year:
|Date||Action||Ticker||Expiration||Strike||Call/Put||Qty||Price||Net||close Price||closeout||Days to Exp|
The last update on trades had generated $43,419 in revenues. I’m approved for “naked” options trading meaning I can sell puts on companies I don’t own and without having the cash to purchase said security. My collateral is owning shares of companies as equity to cover. This update shows I’ve now generated $46,022 in revenues. About $40,000 of that has already been used to purchase more dividend paying stocks. The closeout column is what my total profit will look like if I closed out all trades today. It’s up to over $12,000 from about $10k in the last update. The difference in the revenues and profits is what it would cost me to close out all the trades, about $33,000, same as last time. I’ve only got a couple of puts expiring in the next couple of months, WMT and BDX. Both are looking to expire worthless at this point meaning I would keep all the premiums(in this case over $2,000).
Note: These profits won’t include dividends which I do receive from investing in other dividend paying stocks with the revenue.
Since last month I’ve only made a few trades. A lot of this is due to the way E*Trade is now looking at maintenance requirements. I haven’t figured out their new formulas yet but I may look for another avenue to start options trading since it doesn’t seem consistent any more.
I purchased 100 shares of BGS and simultaneously sold a call and put. I also sold some OHI calls since I see shares depressed for a while. This extra income will be a nice boost. If shares are called away at $30 , I’d received $30.70 total which is higher than my basis so I’m ok with that. I also closed out a $37.50 Teva put while shares have been on a run, that cost me $1700 for a profit of $219.
My V puts continue to be rock solid. The stock just continues to go up no matter what. I believe shares will continue to beat the market for a while. This is why I’ve sold 3 large deep in the money puts for a nice revenue stream. I’d profit over $3500 from V if I closed the 3 puts I have outstanding. I’ll probably put these profits directly into buying more V shares. I don’t mind going overweight this wonderful company.
So what happens in the case that one of these companies is lower near expiration (in the money)? Well, I have a few options.
a. I can do nothing and I’ll be required to purchase 100 shares of said security at the strike price. It’s sort of like I’m buying the company right now at a discount.
b. I can decide to purchase back the put for more money at a loss of approximately (strike – current share value) x 100.
c. Third option is to “roll” the put forward. What this means is that I simultaneously purchase the put back and sell another longer dated put so that I haven’t lost any money.
Any profits will go directly into purchasing more shares of solid dividend-paying companies.
This is just another avenue I’m using to earn additional profits so that I can get this dividend snowball moving faster. I’m still targeting my next goal of $12,000 ($1,000 a month) in forward dividends by end March. My forward dividends are currently $11,197, up from $10,826 last month. I’ll need to put to work about $27,000 at a 3% yield in the next couple of months. With tax season coming up this might post a challenge but I love challenges. Wish me luck!