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Options Update – March 2018

March 9, 2018 by All About Interest 4 Comments

With the markets recent volatility, some readers have asked that I share an update on my options activity.  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
7/6/2017 Sell MO 1/18/2019 90 Put 1 $19.00 $1,894.55 28.5 -$955.45 315
7/6/2017 Sell MO 9/21/2018 75 Call 1 $5.15 $509.55
8/11/2017 BTC MO 9/21/2018 75 Call 1 -$2.12 -$217.45 $292.10
7/6/2017 Sell BDX 1/19/2018 210 Put 1 $18.00 $1,794.55
12/1/2017 BTC BDX 1/19/2018 210 Put 1 -$1.38 -$143.45 $1,651.10
7/6/2017 Sell MDT 6/15/2018 97.5 Put 1 $11.25 $1,119.55 11.25 -$5.45 98
7/6/2017 Sell JNJ 6/15/2018 150 Put 1 $19.50 $1,944.55 20.66 -$121.45 98
7/20/2017 Sell V 6/15/2018 115 Put 1 $17.50 $1,744.55
2/20/2018 BTC V 6/15/2018 115 Put 1 -$2.89 -$294.45 $1,450.10
7/20/2017 Sell V 1/18/2019 130 Put 1 $31.75 $3,169.55 13.45 $1,824.55 315
8/10/2017 Sell ESV 1/18/2019 15 Put 2 $10.50 $2,094.55
3/3/2017 Assigned ESV 4.55 -$4.55
8/9/2017 Sell Teva 1/18/2019 37.5 Put 1 $19.30 $1,924.55
1/18/2018 BTC Teva 1/18/2019 37.5 Put 1 -$17.00 -$1,705.45 $219.10
8/9/2017 Sell Teva 1/18/2019 30 Put 1 $12.20 $1,214.55
3/6/2018 BTC Teva 1/18/2019 30 Put 1 -$11.00 -$1,105.45 $109.10
8/10/2017 Bought Teva 9/1/2017 17 Call 2 -$1.28 -$261.45 -$261.45
8/10/2017 Bought Teva 9/15/2017 17.5 Call 5 -$1.37 -$690.45
9/12/2017 STC Teva 9/15/2017 17.5 Call 5 $2.29 $1,139.55 2.29 $449.10
8/8/2017 Sell GIS 1/18/2019 67.5 Put 1 $12.30 $1,224.55 11.2 $104.55 315
10/19/2017 Sell GIS 1/18/2019 67.5 Put 1 $16.90 $1,684.55 11.2 $564.55 315
8/2/2017 Sell MO 9/21/2018 80 Put 1 $17.50 $1,744.55 12 $544.55 196
9/7/2017 Sell MO 1/18/2019 90 Put 1 $28.50 $2,844.55 28.5 -$5.45 315
10/17/2017 Sell V 12/20/2019 160 Put 1 $52.52 $5,246.55 44 $846.55 651
10/25/2017 Sell T 9/21/2018 40 Put 2 $7.30 $1,454.55 4.65 $524.55 196
10/26/2017 Sell BBL 6/15/2018 35 Put 1 $2.55 $249.55
2/28/2018 BTC BBL 6/15/2018 35 Put 1 -$0.66 -$71.45 $178.10
10/30/2017 Sell CVS 1/19/2018 80 Put 1 $11.90 $1,184.55
1/8/2018 BTC CVS 1/19/2018 80 Put 1 -$2.40 -$245.45 $939.10
12/11/2017 Sell CVS 1/18/2019 77.5 Put 1 $10.42 $1,036.55 11.75 -$138.45 315
1/8/2018 Sell CVS 5/18/2018 82.5 Put 1 $7.30 $724.55 13.33 -$608.45 70
10/31/2017 Sell OHI 6/15/2018 29 Put 1 $2.50 $244.55
12/18/2017 BTC OHI 6/15/2018 29 Put 1 -$2.45 -$250.45 -$5.90
11/13/2017 Sell HBI 1/18/2019 20 Put 1 $3.00 $294.55 2.6 $34.55 315
11/14/2017 Sell WMT 3/16/2018 100 Put 1 $10.85 $1,079.55
02/20/18 BTC WMT 3/16/2018 100 Put 1 -$5.97 -$602.45 $477.10
12/01/17 Sell BDX 3/16/2018 230 Put 1 $10.93 $1,087.55
01/30/18 BTC BDX 3/16/2018 230 Put 1 -$3.00 -$305.45 $782.10
12/01/17 Sell Teva 1/18/2019 32.5 Put 3 $17.20 $5,154.55
3/6/18 BTC Teva 1/18/2019 32.5 Put 3 -$12.33 -$3,704.45 $1,450.10
12/11/17 Sell RDSB 7/20/2018 60 Call 1 $6.34 $628.55 12 -$571.45 133
12/15/17 Sell PG 9/21/2018 92.5 Put 1 $5.20 $514.55 14.05 -$890.45 196
12/15/17 Sell GE 9/21/2018 18 Put 3 $1.64 $486.55 3.6 -$593.45 196
12/15/17 Sell CHD 7/20/2018 50 Call 1 $2.78 $272.55
2/14/18 BTC CHD 7/20/2018 50 Call 1 -$2.45 -$250.45 $22.10
12/28/17 Sell SO 8/17/2018 48 Put 1 $2.75 $269.55 5.15 -$245.45 161
12/28/17 Sell SO 1/18/2019 50 Put 1 $4.75 $469.55 7.7 -$300.45 315
01/08/18 Sell WSM 8/17/2018 57.5 Put 1 $7.70 $764.55 7.2 $44.55 161
01/18/18 Sell BGS 8/17/2018 30 Put 1 $2.50 $244.55 5.6 -$315.45 161
1/18/18 Sell BGS 8/17/2018 35 Call 1 $1.82 $176.55
2/14 BTC BGS 8/17/2018 35 Call 1 -$1.60 -$165.45 $11.10
1/19 Sell IBM 9/21/2018 170 Put 1 $15.65 $1,559.55 17.75 -$215.45 196
1/23/18 Sell OHI 1/18/2019 30 Call 5 $0.70 $344.55 0.7 -$5.45 315
01/23/18 Sell T 1/18/2019 40 Call 2 $1.50 $294.55
02/28/18 BTC T 1/18/2019 40 Call 2 -$1.33 -$271.45 $23.10
02/01/18 Sell OMI 9/21/2018 17.5 Put 5 $2.20 $1,094.55 2.55 -$180.45 196
02/13/18 Sell IBM 9/21/2018 150 Put 1 $10.26 $1,020.55 7.45 $275.55 196
02/14/18 Sell OHI 1/18/2019 25 Put 4 $2.75 $1,094.55 2 $294.55 315
02/16/18 Sell MO 1/18/2019 85 Put 1 $20.66 $2,060.55 20.66 -$5.45 315
02/20/18 Sell SLB 9/21/2018 72.5 Put 1 $9.09 $903.55 9.2 -$16.45 196
02/20/18 Sell CVS 8/17/2018 80 Put 1 $10.57 $1,051.55 13.38 -$286.45 161
03/05/18 Sell HSY 8/17/2018 105 Put 1 $8.42 $836.55 8.42 -$5.45 161
03/05/18 Sell ESV 1/18/2019 10 Put 2 $5.40 $1,074.55 5.6 -$45.45 315
03/06/18 Sell V 1/17/2020 165 Put 1 $43.00 $4,294.55 43 -$5.45 679
03/07/18 Sell XOM 6/21/2019 80 Put 1 $10.96 $1,090.55 10.96 -$5.45 469
03/08/18 Sell MO 1/18/2019 75 Put 1 $12.73 $1,267.55 12.84 -$16.45 315
TOTALS $55,334.75 $7,300.65
Booked $7,781.50

The last update on trades had generated $46,022 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 $55,334 in revenues. Most of this money 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.  I’ve already closed out quite a few positions, you can see the trades.  I’m actually down to $7,300 from $12,000 in the last update with the market corrections.  The difference in the revenues and profits is what it would cost me to close out all the trades, about $48,000.

I’ve already booked profits of $7,781.50 on closed trades.  Since my booked profits are nearly equal to Total profits, my open trades are neutral right now.

Note: These profits won’t include dividends which I do receive from investing in other dividend paying stocks with the revenue.

Since last update, I’ve made at least 15 trades, you can see the dates on all my trades above.

One of my top trades was closing out a $115 Visa put I sold.  I (BTC) bought to close that put and made a net profit of over $1400.  Yes, $1400 on 1 single put!  I also closed out some TEVA puts for similar gains.  My biggest gain to date was a BDX put I closed out for a sweet $1650 net profit!

My V puts continue to be rock solid.  I sold an additional V put and quite a few new puts in HSY, MO, IBM, XOM etc.  In fact, I used some of these profits to buy an additional 40 shares of V in this account recently.

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 actually just broke the $12,000 forward dividends goal ahead of schedule.  I’ll probably be posting about that soon.  The extra options income is certainly helping speed up the process.  My forward dividends are currently  $12,286, up from $11,197 a month ago.  My goal by the end of the year is to be at a forward dividend income of $13,000.  I’ll need to put to work about $23,800 at a 3% yield which shouldn’t be a tough task.

Best long ideas currently are SQ, V, BRK.B, MO, CVS, DIS to name a few.  I’ll be adding more to these companies throughout the year at these prices.  Yes I know that SQ and BRK.B don’t pay a dividend, but I’ve decided to have a speculative portfolio that contains non dividend paying stocks up to 10% of the portfolio value for now.

 

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Filed Under: Articles, Options Trades

Comments

  1. FerdiS says

    March 11, 2018 at 11:05 am

    Exceptional performance, JC. More than $55k from options income is amazing, well done! I’m cranking the options machine this year and I’m hoping to increase my ability to buy more dividind growth stocks as you are doing.

    All the best!
    FerdiS, DivGro

    Reply
    • All About Interest says

      March 12, 2018 at 8:53 am

      Hi Ferdi,

      I think you mixed me up with JC but not worries. Yes, the $55,000 has all been put back to work buying more dividend growth stocks which pay me more dividends that I can keep reinvesting back into more shares. Rinse and repeat. I’m looking for any ways I can get to speed up this process. So far I’m happy with my options trades.

      Cheers!

      Reply
  2. JC says

    March 12, 2018 at 7:34 am

    Thanks for the update. It’s good seeing how others approach options. I typically go with shorter dated, like 1 month out options, but as a core part of the portfolio it probably isn’t a bad idea to go much further out in time if the premium is worth it. And then just use the premium to purchase shares and worst case scenario you just roll it out 6 months to a 1 year of course those expirations will be less liquid but it seems like a reasonable way to build the portfolio/dividends up.
    JC recently posted…Budget Check & Cash Flow Update – February 2018My Profile

    Reply
    • All About Interest says

      March 12, 2018 at 8:54 am

      Hi JC,

      I’ve played with shorter dated options but the commissions eat into the profits a lot. I sold an ITM V put with $4300 in revenues, at that price the commissions are negligible. You do make a good point about liquidity, however as time passes the puts before more liquid as more people are trading them closer to expiration. That’s the time I normally will roll them forward.

      Thanks for stopping by!

      Reply

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I'm a 39-year-old dividend growth investor, wanna be real estate mogul, entrepreneur and dad. Follow me on my journey to financial independence!
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