Options Trades

Sell, New Purchase & Options Trade – NSC, TGH

July 25, 2013 by All About Interest

It’s very rare for me to actually sell one of my holdings, especially one that was not a speculative play and has a history of increasing dividends. However, I made three trades that I believe will benefit my portfolio.

So Tuesday NSC raised the dividend only 4% and reported earnings below expectations. A 4% raise isn’t bad but it’s a lot lower than I expect for a company with a dividend yield of only 2.7%. NSC has also increased dividends twice yearly since 2010 expect for this year. So considering they didn’t raise the dividend in January and it was a smaller increase for the second half of the year, I decided to trim my position. This also gets my position back to a normal weight and I can add another stock that has higher dividend growth potential with a lower current weight.

My last purchase of NSC was last November when I bought 37 shares @ $60.29/share. I ended up selling $2k worth (28 shares) Wednesday @ $73/share. I profited about $364 not counting dividends collected. I actually was scrambling Tuesday to get an order in before the closing bell but was too late. I should have placed a market order for Wednesday morning but I decided to think about it a little more. After thinking about it I decided I would sell off $2k in shares since they were already a little overweight and use the proceeds to buy $2k worth of TGH which is also an industrial but pays a higher dividend. TGH was also a very low weighting and was due for another purchase. The price of TGH had also come down close to my cost basis which makes the choice even easier.

I still view NSC as a long-term holding so I also just sold a $75 March ’14 Put @ 6.50 collecting $650 in premiums. I’ll be able to pick up 100 shares of NSC at a price of $68.50/share which would yield greater than 3%.

By selling 28 shares I lost $58.24 in yearly dividends. However, by buying 56 shares of TGH I added $103.04 to my yearly total for a net gain of $44.80. I’ve also set myself up to add more shares of NSC should the price keep falling.

Options Assignment – BBVA

July 22, 2013 by All About Interest

I’m reporting an options assignment with BBVA. I originally posted back on March 1st about selling three 07/20/13 puts @ $9.

On 07/20/13 I was assigned 300 shares of BBVA @ $9/share. I also collected premiums of $210 reducing my cost basis to $8.30/share not counting commissions. This is a little higher than my cost basis of $7.09/share. My new cost basis is $7.82/share.

I bank with BBVA and they also hold my primary mortgage. They have one of the easiest to use online systems I’ve seen. BBVA currently yields 6.4%. They also have exposure in many countries, not sure Spain. Morningstar has then rated 3 stars, a forward p/e of 8.2 and a PEG ratio of 0.2. I’ve changed my stance from a speculative play to being long on BBVA. These 300 share increase my total share of BBVA to 508.

I still have 6 puts outstanding with BBVA. These can be found on my options page.

These additional 300 shares will increase my yearly dividends by $156/year and bring my 12-month dividend total to $6546.50.

Options Trade – PAAS

July 19, 2013 by All About Interest

Back on April 17, I sold 2 PAAS puts. I sold two 07/20/13 $14 PAAS Puts @ 1.47. That post can be found here.

Since then I’ve had one of those puts assigned and the last put expires tomorrow. Since the put is in the money I will be required to purchase 100 shares at $14/share. Instead of letting the put expire I decided to close out the put for a small loss and sell a further dated put to make up the difference.

This practice is typically called “rolling” your puts.

Here’s what I did. I bought back the $14 PAAS 07/20 Put for 1.87 and simultaneously sold a Jan 18 ’14 $13 PAAS PUT for 2.32. Not counting commissions I’ve now earned an additional $55 and if assigned I will have reduced my cost of these 100 shares from $12.53 ($14 – 1.47). to $11.08 ($13 – 2.32 + .40). The .40 is the loss I incurred by buying back the original put for 1.87.

By rolling the put to a later date I feel I’ve reduced my risk.

PAAS continues to be my speculative options play.

I currently have 14 open options positions and a total options profit of $3058 for 2013. My options page has been updated accordingly.

2013 Goal Achieved – $3000 in Options Income

July 12, 2013 by All About Interest

With the closing of a BBL put this morning it has pushed my options income over the $3000 mark for the year which completes another one of my goals for 2013!

I never thought I’d collect this much in premiums with almost half the year left to go. The great part about this is that I’ve never held more than $13k in my options account. That’s a 23% return on my money in just over 6 months. I do expect dividend income to eventually catch up and pass my options income but I’m sure going to try and keep the pace going.

I’ve already completed 3 out of my 8 goals so far this year. All of my goals are posted on my goals tab.

Options Trade – BBL

July 12, 2013 by All About Interest

I decided to close out one of my BBL puts that I just sold last week! That post is here. I had a nice quick gain and decided to take advantage. This also freed up more cash in the event that the 2 PAAS puts gets assigned this month which still looks very likely.

The trades:

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

I earned a profit of $130 in only a week! I did pay commissions of $21.50 so my net profit was $108.50 in only 7 days! Taking my margin requirements into account, this trade only tied up about $500. That’s over a 20% profit in 7 days. The calculator I was using gave an error for annualized rate of return since it’s over 10,000%!

I currently have 14 open options positions and a total options profit of $3098 for 2013 and have met my $3000 goal for the year. My options income still continues to outpace my dividend income but I believe that my dividend income will catch up to and pass my options income in the third quarter.

My options page has been updated accordingly.

Options Trade – Conoco Phillips (COP)

July 9, 2013 by All About Interest

I decided to close out one of my puts that I had a nice gain on. This also freed up a little bit of cash in the event that the 2 PAAS puts gets assigned this month. It looks very likely that will happen.

I originally sold a put in COP back in April. COP is a stock I currently own and still like the fundaments of. I would have had no problem if these shares were assigned to me. However, I needed to free up some cash and decided to take advantage of the price move upwards COP has had.

The trades:

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

I earned a profit of $174 in a little over two months.

I currently have 14 open options positions and a total options profit of $2968 for 2013 and am really close to my goal of $3000 for the year. My options income still continues to outpace my dividend income but I believe that my dividend income will catch up to and pass my options income in the third quarter.

My options page has been updated accordingly.

Options Trade – BBL, BBVA

July 8, 2013 by All About Interest

Back on May 14, I originally sold a put against BBL. Since then, BBL’s shares have gone down considerably more. I’ve taken the opportunity to double down on my puts. I’m reporting a put I sold last week.

I also forgot to post a previous options trade I had. I sold another put of my speculative bank play, BBVA, which I actually am a member of. BBVA also holds my primary mortage and I’ve decided I wouldn’t mind being a long-term shareholder. I sold 3 Jan 18 ’13 $8 Puts @ .90. I currently have 9 naked puts against BBVA.

I Sold 1 BBL Dec 21 ’13 $50 Put @ 4.50

This trade could turn out a few ways:

1) I hold shares until expiration and shares are trading above $50.00. I will get to keep the $450 in options premiums.

2) I hold shares until expiration and shares are trading below $50.00. I will get assigned 100 shares of BBL at a cost of $45.50/share. This price also corresponds to a yield of 4.8%.

3) Shares of BBL go on a run and I decide to buy back the put early for a profit less than $450.

I currently have 16 open options positions and a total options profit of $2794 for 2013. My options page has been updated accordingly.

Options Assignment – PAAS

July 1, 2013 by All About Interest

I’m reporting an options assignment with PAAS. So I originally posted back on April 17th about making a speculative purchase in PAAS. I also posted some reasons I was interested in the stock. Well the stock hasn’t done much , it’s actually down a little since then and is my worst performer. This is why I don’t make many speculative purchases. However, I plan to hold and see what happens with this one while I collect a 4% dividend.

The original post was here. I bought 150 shares and sold 2 puts expiring in July. Well one of those puts was assigned early. There is always a risk of early assignment when options are “in the money.”

I still have 1 put outstanding with an expiration of July 20th.

This purchase brings my forward 12-month dividend total to $6189.02.

Options Expiration – MO, KMI

June 23, 2013 by All About Interest

I originally sold puts in both MO and KMI back last December. These are stocks I currently own and still like the fundaments of. I would have had no problem if these shares were assigned to me. This is why I sell puts against companies that I’d like to own more of. I don’t have to worry about getting assigned shares since I’m picking a price that’s cheaper than current market values and one that I would be happy to pay. Instead these options expired and I am collecting the full premiums.

The original trades:

12/19/12 Sold 1 KMI June 22 ’13 $32.50 Put @ 1.18
12/26/12 Sold 1 MO Jun 22 ’13 $30 Put @ 1.32

Both of these expired this weekend so I get to keep $250 in options premiums. This brings my total options premiums to $2794.

I currently have 14 open options positions and a total options profit of $2794 for 2013 and am really close to my goal of $3000 for the year. My options income still continues to outpace my dividend income but this month my dividend income will be edging closer. I believe that my dividend income will catch up to and pass my options income in the third quarter.

My options page has been updated accordingly.

Options Trade – Textainer Group (TGH)

May 31, 2013 by All About Interest

I’m reporting a put I sold this week. I set a limit order for TGH that was executed. I picked some up as a speculative play and it’s had a little recent weakness so I decided to sell a put.

I Sold 1 TGH Nov 16 ’13 $35 Put @ 1.75

This trade could turn out a few ways:

1) I hold shares until expiration and shares are trading above $35.00. I will get to keep the $175 in options premiums.

2) I hold shares until expiration and shares are trading below $35.00. I will get assigned 100 shares of TGH at a cost of $33.25/share. This price also corresponds to a yield of 5.5%.

3) Shares of TGH go on a run and I decide to buy back the put early for a profit less than $175.

I currently have 16 open options positions and a total options profit of $2544 for 2013. My options page has been updated accordingly.