My options trading has been a little quiet over the past few months. Activity should continue to pick up the second half of the year when I usually have more funds available for investing.
If you remember, VZ purchased the remainder of their share of Verizon Wireless from VOD. This resulted in several transactions and adjusted cost basis. My VOD cost basis went up quite a bit and I mentioned how I calculated that here and also about the initial transaction and purchase of more VZ stock after the deal went through here.
I plan to still keep VOD as a full position as well as VZ. I haven’t decided if I want to add a third communications company to the mix, possibly one of the Canadian carriers at some point. My Telecom exposure is still fairly low compared to other sector weights and I’m hoping to use puts to purchase more shares.
I Sold 3 VOD Jan 17 ’15 $30.00 Puts @ 1.18
This trade could turn out a few ways:
1) I hold shares until expiration and shares are trading above $30.00. I will get to keep the $354 in options premiums.
2) I hold shares until expiration and shares are trading below $30.00. I will get assigned 100 shares of VOD at a cost of $28.72/share which corresponds to a 6.4% yield without an increase in their second payment. This is a discount of over 12% from where the stock is currently trading and a huge discount to my cost basis of $38.02. Of course my basis was adjusted upwards after VZ bought out the rest of VOD’s stake in Verizon Wireless. I mentioned that in the article I linked to at the top of the page.
3) Shares of VOD go on a run and I decide to buy back the put early for a profit less than $354.
I currently have 9 open options positions and a total options profit of $900 for 2014.
My options page has been updated accordingly.