I originally bought 100 shares of SWY back on Dec. 6th for 19.12/share mentioned in a post here.
This was near the high of the day and I watched as shares trade down into the 17/share range afterwards.
Instead of buying more to average down, I sold a $17 june put on 12/26 and collected $155 in premiums. This trade is listed on my options tab.
Well this week has seen SWY trade up to almost $20/share. I am not convinced that SWY will be a long-term holding. Much of their earnings increases are due to share buy backs. However, they do pay a nice yield, near 4%, and are volatile and liquid enough to be a good options trading candidate. I am willing to collect the dividend and trade some options for extra income while I wait.
Today I sold a $20 Sept call for a $140 premium. So not counting fees, I have collected $295. I have reduced my cost to around $16.17/share. I now plan to wait out these options while collecting dividends. Hopefully the stock stays range-bound between $17-$20 and the options expire.
I will continue trading options in my marginable account as long as I don’t exceed 15% of the value of my DG portfolio in cash needed. I currently have just under $10k in my options account and never exceeded that amount all of last year. I always keep sufficient cash so I am not borrowing and paying any interest.
This is my first post done entirely on my IPAD. It was a pain but I am out of town and could not sleep. I guess I am getting addicted to blogging!