2013 – Year End Options Review

2013 has been a great year on the options front.  If you caught my 2012 full year options review you will see that I almost doubled my options profits in 2013.

For anyone no that familiar with options or specifically selling puts, I wrote an introduction to options trading – part 1 (puts) in 2013.

What’s remarkable about these profits are that I never kept more than $14,000 in cash in my options account.  So do the math, $4583.18/$14,000 is a return of over 32%.  Think of it this way; it took a portfolio of over $200,000 to produce about $5500 in income while it took another account of only $14,000 to produce about $4000 in profits.  Obviously this doesn’t take into account capital gains but I don’t plan on selling any stocks so these are unrealized gains.  We aren’t exactly comparing apples to apples but I just wanted to make a point about diversified strategies being able to boost your income.  

As always, I will keep track of my yearly trades on my options tab:

Closed out (2013):

Total Profit: $4583.18 (before commissions)

12/21/13 Option Assigned – Sold 100 shares x $35/share
08/21/13 Sold 1 DOW Dec 21 ’13 $35 Call @ 3.25
Profit:  {$38.25 – $33.93(basis)}x100 shares + $32 (dividends) – $29.82(commissions) = $434.18

11/02/13 Option Assigned – Bought 100 share x $45/share
05/28/13 Sold 1 SO Nov 16 ’13 $45 Put @ 2.09

10/19/13 Option expired
03/26/13 Sold 3 BBVA Oct 19 ’13 $8 Puts @ 0.75
Profit:  $225

10/14/13 BTC 1 TGH Nov 16 ’13 $35 Put @ .25
05/29/13 Sold 1 TGH Nov 16 ’13 $35 Put @ 1.75
Profit: $150

10/14/13 BTC 1 BBL Dec 21 ’13 $55 Put @ 1.30
05/09/13 Sold 1 BBL Dec 21 ’13 $55 Put @ 3.00
Profit: $170

10/14/13 BTC 1 TEVA Dec 21 ’13 $37.50 Put @ 0.47
05/02/13 Sold 1 TEVA Dec 21 ’13 $37.50 Put @ 2.50
Profit: $203

10/03/13 BTC 1 INTC Oct 19 ’13 $22 Put @ 0.35
04/08/13 Sold 1 INTC Oct 19 ’13 $22 Put @ 2.28
Profit: $193

09/23/13 BTC 1 TWGP Apr 19 ’14 $17.50 Put @ $9.50
08/29/13 Sold 1 TWGP Apr 19 ’14 $17.50 Put @ $4.40
Loss: $510

09/23/13 BTC 1 NSC Mar 22 ’14 $75 Pu @ 3.88
07/24/13 Sold 1 NSC Mar 22 ’14 $75 Put @ 6.50
Profit:  $262

09/23/13 BTC 1 CAT Nov 16 ’13 $80 Put @ 1.21
07/26/13 Sold 1 CAT Nov 16 ’13 $80 Put @ 3.37
Profit: $216

09/21/13 Expired
02/27/13 Sold 1 LO Sep 21 ’13 $37.50 Put @ 2.97
Profit: $297

09/17/13 Executed – Sold 100 shares @ $20/share
01/24/13 Sold 1 SWY Sept 21 ’13 $20 Call @ 1.40
Cost Basis:

08/08/13 Sold 1 TWGP Oct 19 ’13 $20 Put @ $3.00
08/29/13 BTC 1 TWGP OCT 19 ’13 $20 Put @ $6.50
Loss: $350

08/17/13 Expired
02/12/13 Sold 1 KO Aug 17 ’13 $37.50 Put @ 1.71
Profit: $171

08/17/13 Expired
12/27/12 Sold 1 CSX Aug 17 ’13 $20 Put @ 2.00
Profit: $200

07/23/13 BTC 1 PAAS Jan 18 ’14 $13 Put @ 1.75
07/19/13 Sold 1 PAAS Jan 18 ’14 $13 Put @ 2.32
Profit: $57

07/20/13 Assigned 300 shares of BBVA @ $9/share
03/01/13 Sold 3 BBVA July 20 ’13 $9 Puts @ .70
Cost Basis: $8.30/share

07/19/13 BTC 1 PAAS July 20 ’13 $14 Put @ 1.87
04/15/13 Sold 1 PAAS July 20 ’13 $14 Put @ 1.47
Loss: $40

07/12/13 BTC 1 BBL Dec 21 ’13 $50 Put @ 3.2
07/05/13 Sold 1 BBL Dec 21 ’13 $50 Put @ 4.5
Profit: $130

07/08/13 BTC 1 COP Nov 16 ’13 $55 Put @ .78
04/25/13 Sold 1 COP Nov 16 ’13 $55 Put @ 2.52
Profit: $174

06/27/13 Options Assignment (assigned early)
 Assigned 100 Shares of PAAS @ $14/share
 04/15/13 Sold 1 PAAS July 20 ’13 $14 Put @ 1.47

06/22/13 Expired
12/26/12 Sold 1 MO Jun 22 ’13 $30 Put @ 1.32
Profit: $132

06/22/13 Expired
12/19/12 Sold 1 KMI June 22 ’13 $32.50 Put @ 1.18
Profit: $118

05/07/13 BTC 1 CAT Nov 16 ’13 $70 Put @ .88
04/17/13 Sold 1 CAT Nov 16 ’13 $70 Put @ 2.65
Profit:  $177

05/06/13 Bought-to-Close 1 CAT Aug 17 ’13 $85 Put @ 2.9
02/21/13 Sold 1 CAT Aug 17 ’13 $85 Put @ 4.00
Profit: $110

04/24/13 Bought-To-Close 1 RTN Aug 17 ’13 $50 Put @ .50
02/04/13 Sold 1 RTN Aug 17 ’13 $50 Put @ 2.05
Profit:  $155

04/21/13 Expired 1 WM Apr 20 ’13 $30 Put @ 1.35
10/02/12 Sold 1 WM Apr 20 ’13 $30 Put @ 1.35
Profit:  $135

04/17/13 Bought-To-Close 1 INTC July 20 ’13 $21 Put @ .75
11/08/12 Sold 1 INTC July 20 ’13 $21 Put @ 1.96
Profit:  $121

04/04/13 Bought-To-Close 1 LO June 22 ’13 $38.33 Put @ .90
01/16/13 Sold 1 LO June 22 ’13 $38.33 Put @ 2.72
Profit:  $182

04/03/13 Bought-To-Close 1 DRI July 20 ’13 $44 Put @ 0.45
02/13/13 Sold 1 DRI July 20 ’13 $44 Put @ 2.31
Profit:  $186

03/27/13 Bought-To-Close 1 LO Jan 18 ’14 $40 Put @ $3.75
03/06/13 Sold 1 LO Jan 18 ’14 $40 Put @ 5.35
Profit:  $160

03/25/13 Bought-To-Close 2 BBVA Jan 18 ’14 $10 Calls @ .70
01/11/13 Sold 2 BBVA Jan 18 ’14 $10 Calls @ 1.40
Profit: $140

03/07/13 100 shares called away
01/07/13 Sold 1 WM July 20 ’13 $34 Call @ 1.3
Cost Basis:

03/06/13 Bought-To-Close 2 INTC Oct 19 ’13 $22 Puts @ 1.79
01/08/13 Sold 2 INTC Oct 19 ’13 $22 Puts @ 2.53
Profit: $148

02/27/13 Bought-To-Close 1 SWY Jun 22 ’13 $17 Put @ .25
12/27/12 Sold 1 SWY Jun 22 ’13 $17 Put @ 1.55
Profit:  $130

02/21/13 Bought-To-Close 1 PM Sept 21 ’13 $85 Put @ 2.46
01/30/13 Sold 1 PM Sept 21 ’13 $85 Put @ 4.23
Profit: $177

02/16/13 Expired
09/14/12 Sold 1 TGH Feb 16 ’13 $30 Put @ 2.10
Profit: $210

01/19/13 100 shares called away
09/13/12 Sold 1 TSM Jan 19 ’13 $15 Call @ .91
Cost Basis: $11.22/share

01/19/13 Expired
09/04/12 Sold 4 BBVA Jan 19 ’13 $6 Puts @ .40
Profit: $160

01/19/13 Expired
10/25/12 Sold 1 NSC Jan 19 ’13 $60 Put @ 2.10
Profit: $210

01/07/13  Call assignment – 200 shares of BBVA called away @ $8
09/04/12 Sold 2 BBVA Jan 19 ’13 $8 Calls @ .60

01/04/13 Bought to Close 1 NSC March 16 ’13 $67.50 Put @ 3.74
09/20/12 Sold 1 NSC March 16 ’13 $67.50 Put @ 5.17
Profit: $143

The Trades

I made a total profit before commission of $4583.18.  There were a few call assignments that I didn’t tally up my profits on so this number would be a little higher.  I only included my recent profits of the DOW assignment since I actually moved my 100 shares of DOW into my speculative options account and considered the shares like cash.  I only plan to sell calls on positions that are either speculative or extremely overvalued.

I came up with total commissions of roughly $600.00.  Although my commissions were higher they only amounted to 13% of my earnings versus 17.3% of my earnings last year.  I was able to reduce my commissions by selling longer dated puts and puts that were deeper in-the-money.  I will try my best to reduce commission further in 2014.

My total profit after commissions was $3983.18 versus $2249.74 for 2012.  While I didn’t make more profit from options than I did in dividend income this year, I think the options portfolio did extremely well!  I don’t know if this streak will continue but I do plan to keep my strategy of selling naked puts on companies I want to own anyways.

As I mentioned, I was assigned shares 3 times at expiration due to selling puts.  Let’s look at how those turned out.  Since I’ve already counted the income from selling the puts and subtracted the commissions from my profit I won’t use an adjusted cost basis for a simple calculation of capital gains from these shares.

The list below came from last year’s update on how I’d reduce commissions:

Going forward, I would like to reduce the % of profits lost through commissions.  I’ve outlined 6 ways in which I can accomplish this:

1.)  selling multiple puts at once –   While I could sell more than 1 put at a time, this one will be tough because I’m committing to 100 shares per contract that is sold.
I did this on a few occasions this year when I could.  It’s tough to commit to more than 100 shares with a relatively small options account.  This should get better as my options portfolio gets larger.  

2.) request better pricing – I’ve called E*trade and requested lower fees that are comparable to another brokerage firm.  This is in process and I will post the results when it happens.
I tried this with the promise of moving another 100k over to my E*Trade account throughout the year.  They wanted me to move the money immediately in order to get lowered commissions.  I plan to try again to work something out with them.  

3.) use another brokerage firm –  I’ve actually already signed up at sharebuilder and plan to start contributing by February using that account.  They do allow options and I’ll be looking into pricing.
I opened a Sharebuilder account and love it!  However, I haven’t used it for options yet due to not being able to get margin right away.  

4.) wait for puts to expire – If I sell less puts that are speculative in nature then I would be more willing to ride out the put until expiration.  When the put expires worthless there is no additional fee involving like when I have to buy back the put to close out the position.
I let several puts expire worthless so I didn’t have to pay a commission to close them out.

5.) sell in-the-money puts – Basically this is selling a put priced around the current market value or less.  While this strategy has a much higher change of getting put shares, the premiums paid are also much higher.
I did this as well and it worked out so I saw larger profits.  

6.) sell longer dated puts –  The longer until expiration, the higher the premiums you can earn.  I do plan on selling some longer dated puts.
I tried to sell puts at least 6 months out and this also helped me bring in larger premiums.