Today with INTC down to about $25.90 I entered into the following trade:
07/09/12 STO 4 INTC Jul 21 2012 25 Puts @.26 90.99
This is a 12 day trade on a stock I'd like to own long term. It will soon be a member of the Dividend Achiever family. In fact, I expect the news of a dividend raise in the near future.
If these puts expire worthless we will earn 5.3% or 161.21% annual on $1713 in margin maintenance. The returns are inflated due to an earnings release set for July 17. If the stock drops we have many options to roll out and/or down for a net credit. As such, an exit strategy is in place.
Even if the stock doesn't drop I will probably look to roll on a weekly basis, if possible. INTC has weekly options.
Showing posts with label weekly options. Show all posts
Showing posts with label weekly options. Show all posts
Monday, July 9, 2012
Friday, January 20, 2012
Trade Continuation: Conoco Phillips (COP) Covered Calls
Today in a taxable account I continued the following transaction:
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
01/20/2012 BTC 2 COP Jan 21 2012 70 Calls @.77 -165.52
01/20/2012 STO 2 COP Jan 27 2012 70 Calls @1.35 +258.45
We rolled the covered call for a net credit of $92.93. This lowers our out of pocket to $13788.57 or $68.94/share. If we get called away we will make $190.43 in 2 weeks. This equates to a return of 1.4% or 35.9% annual. Before we get exercised we will look to roll the options again with an eye on the weeklys.
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
01/20/2012 BTC 2 COP Jan 21 2012 70 Calls @.77 -165.52
01/20/2012 STO 2 COP Jan 27 2012 70 Calls @1.35 +258.45
We rolled the covered call for a net credit of $92.93. This lowers our out of pocket to $13788.57 or $68.94/share. If we get called away we will make $190.43 in 2 weeks. This equates to a return of 1.4% or 35.9% annual. Before we get exercised we will look to roll the options again with an eye on the weeklys.
Thursday, January 19, 2012
New Trade: SLV Naked Puts
Today in a taxable account with SLV trading at 29.65 I entered into the following transaction:
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
The new weekly options on this came out today. I was so busy with other things that I missed out on last week's trade. The dollar seems to be weakening again and the precious metals bottomed a couple of weeks ago. If the trade goes against me I'll either close or roll out and down. If these puts expire worthless it is 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
The new weekly options on this came out today. I was so busy with other things that I missed out on last week's trade. The dollar seems to be weakening again and the precious metals bottomed a couple of weeks ago. If the trade goes against me I'll either close or roll out and down. If these puts expire worthless it is 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
Thursday, January 12, 2012
Profitable Trade: SLV Naked Puts
Yesterday in a taxable account I closed the following transaction:
12/22/2011 STO 8 SLV Dec 30 2011 26 Puts @.09 55.94
12/29/2011 BTC 8 SLV Dec 30 2011 26 Puts @.38 -320.05
12/29/2011 STO 8 SLV Jan 21 2012 25 Puts @.7 +553.88
01/11/2012 BTC 8 SLV Jan 21 2012 25 Puts @.04 -32.10
This trade netted $257.67 in 19 days on ~ $2200 in margin. That is a return on margin of 11.71% or 224.95%. It also allowed me to exceed my goal of making 2 - 3% a month by writing naked puts on margin in this little account. I didn't milk the last $32 of the trade so I could possibly take advantage of the new weekly options that come out today. If one can enter into weekly option trade on Thursday or Friday, studies have shown that over the weekend there is ~ 30% drop due to time decay.
I should note that with the money I've made in this account through recent trades I am able to add to my holdings in my core dividend growth portfolio. Every time I earn $1000 I add to my holdings. Today I added 14 shares of Conoco-Phillips at 71.62. The yield is 3.67% and they are set to raise the dividend next time around. I like the idea of the company splitting and spinning off shares my way. I look at this as another little boat set to sail that will compound over time and bring me passive income.
12/22/2011 STO 8 SLV Dec 30 2011 26 Puts @.09 55.94
12/29/2011 BTC 8 SLV Dec 30 2011 26 Puts @.38 -320.05
12/29/2011 STO 8 SLV Jan 21 2012 25 Puts @.7 +553.88
01/11/2012 BTC 8 SLV Jan 21 2012 25 Puts @.04 -32.10
This trade netted $257.67 in 19 days on ~ $2200 in margin. That is a return on margin of 11.71% or 224.95%. It also allowed me to exceed my goal of making 2 - 3% a month by writing naked puts on margin in this little account. I didn't milk the last $32 of the trade so I could possibly take advantage of the new weekly options that come out today. If one can enter into weekly option trade on Thursday or Friday, studies have shown that over the weekend there is ~ 30% drop due to time decay.
I should note that with the money I've made in this account through recent trades I am able to add to my holdings in my core dividend growth portfolio. Every time I earn $1000 I add to my holdings. Today I added 14 shares of Conoco-Phillips at 71.62. The yield is 3.67% and they are set to raise the dividend next time around. I like the idea of the company splitting and spinning off shares my way. I look at this as another little boat set to sail that will compound over time and bring me passive income.
Friday, November 4, 2011
What to do with my MSFT trade?
Here is my initial trade:
It's option expiration today on the weekly. MSFT is trading at ~26.22 as of this writing. If I roll out the 26 a week most of the gain will be eaten by commissions in and out. While weekly options are terrific it should be noted that to roll from one week to the next one must have a substantial number of contracts otherwise commissions may make rolling cost prohibitive.
Two weeks out we'll gain ~.30/share after commissions and if it stays in the money we'll probably get called away early on the 14th so someone else can collect the dividend. There is a .20/share dividend in it for me if I can hold the stock through the 14th.
43 days away at the 26 strike I can collect ~.46/share and probably still collect the dividend for a total of .66/share. It seems to me my options today are to get assigned and make my little bit of dough which is nice on an annualized basis or tie up capital for a month and a half and have more potential gain but less powder in the keg should the market tank.
Note: It looks like the market might break down. That is fine for me as my favorite scenario is that MSFT ends up slightly under 26 and these 2 calls expire worthless. On the other hand if I roll a week I get the great time decay over the weekend. I read a study that showed that ATM or OTM weekly option calls drop ~30% over the weekend due to time decay.
11/01/2011 13:29:58 Bought 200 MSFT @ 26.029 -5,215.79
11/01/2011 13:31:11 Sold 2 MSFT Nov 04 2011 26.0
Call @ 0.36 60.47
It's option expiration today on the weekly. MSFT is trading at ~26.22 as of this writing. If I roll out the 26 a week most of the gain will be eaten by commissions in and out. While weekly options are terrific it should be noted that to roll from one week to the next one must have a substantial number of contracts otherwise commissions may make rolling cost prohibitive.
Two weeks out we'll gain ~.30/share after commissions and if it stays in the money we'll probably get called away early on the 14th so someone else can collect the dividend. There is a .20/share dividend in it for me if I can hold the stock through the 14th.
43 days away at the 26 strike I can collect ~.46/share and probably still collect the dividend for a total of .66/share. It seems to me my options today are to get assigned and make my little bit of dough which is nice on an annualized basis or tie up capital for a month and a half and have more potential gain but less powder in the keg should the market tank.
Note: It looks like the market might break down. That is fine for me as my favorite scenario is that MSFT ends up slightly under 26 and these 2 calls expire worthless. On the other hand if I roll a week I get the great time decay over the weekend. I read a study that showed that ATM or OTM weekly option calls drop ~30% over the weekend due to time decay.
Wednesday, November 2, 2011
New Trade: Intel (INTC) Covered Call
This morning I entered into the following transaction:
11/02/2011 10:27:54 Bought 200 INTC @ 23.8875 -4,787.49
11/02/2011 10:28:23 Sold 2 INTC Nov 19 2011 24.0
Call @ 0.42 72.47
Tomorrow is ex-dividend so unless we get assigned today we will capture the $42 dividend. I love my Double-D's! (double dividends, silly)... The second "dividend" is the short call premium we've collected. Our cost basis/downside protection in this trade is $23.57. Intel has weekly options so there are a variety of ways to manage this trade.
Tuesday, November 1, 2011
New Trade: Microsoft MSFT Covered Call
This afternoon with the DOW down over 300 points I entered into a Microsoft covered call investment. Microsoft has been raising their dividend for seven straight years. It just raised the dividend to .20/share (3.07% annual yield) and goes ex-dividend November 15. MSFT fulfills my qualification of a stock I would like to hold long term. Here is the transaction:
11/01/2011 13:29:58 Bought 100 MSFT @ 26.029 -5,215.79
11/01/2011 13:31:11 Sold 2 MSFT Nov 04 2011 26.0
Call @ 0.36 60.47
I may take the ~1% return in 3 days on this weekly option, however, another definite possibility depending on how the next couple of days plays out, is that I will roll the trade to the next week or Nov 19 with an eye toward capturing the dividend. Of course, there is also the possibility the call expires worthless. In any event, our cost basis is $25.77.
Tuesday, October 25, 2011
GDX Covered Call Trade
Bought GDX @56.72
STO GDX Oct. 28, 2011 56 Call @ 1.52
This in the money weekly option has only 3 days left before expiration. If it gets called out we'll make $80 per contract for 3 days on a $5520.00 investment. That's a 1.45% return for 3 days or 176.41% annually. These calculations are exclusive of commissions.
Precious metals seemed to have bottomed and began their ascent once again. We would prefer to get called out but if not we'll simply write next week's call of our choosing. If it really craters we might write a monthly call. We have downside protection on this 3 day trade to $55.20.
STO GDX Oct. 28, 2011 56 Call @ 1.52
This in the money weekly option has only 3 days left before expiration. If it gets called out we'll make $80 per contract for 3 days on a $5520.00 investment. That's a 1.45% return for 3 days or 176.41% annually. These calculations are exclusive of commissions.
Precious metals seemed to have bottomed and began their ascent once again. We would prefer to get called out but if not we'll simply write next week's call of our choosing. If it really craters we might write a monthly call. We have downside protection on this 3 day trade to $55.20.
Sunday, October 23, 2011
Weekly Options
I'm going to open this blog with a post about weekly options. For an income investor who sells options, the advent of weekly options is the greatest thing since sliced bread. For many option income strategies, time decay will be the option sellers best friend. In a weekly option, time value decays extremely fast. In addition, a new option can be sold weekly rather than monthly. (Of course some savvy traders buy and sell an option multiple times in a month as it moves through it's chart's price cycle.)
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