Options Update – March 2019

I apologize for it taking a while for an update on my options activity. It’s been a roller coaster ride since December! Options were deep in the red during the December selloff and I had some V puts called. I shifted some funds around to keep from having a margin call and slowly added some puts. Man have things turned around now, the market has been on a tear. I continue selling puts against companies I want to own more of and using proceeds to purchase more shares of these companies.

You’ll notice the list is significantly shorter this time. That’s because I’ve hidden rows of closed out positions. Going forward I’ll only be showing a picture of open position. I currently have 51 open puts.

Below are all my open options positions:

The last update on trades had generated $82,894.55 in revenues, I’m now up to $102,396.  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.  Most of the revenue generated has already been used to purchase more dividend paying stocks.  The closeout column is what each call/put will cost to close out today.  Basically if I close out every single open position I’d have a  profit of $18,940.60.  This is down slightly but I’ve booked some profits recently so really my options positions have improved.

I’ve already booked profits of $5,621.20 up from $3,375.20 in my last update on closed trades. 

My net profits if I closed out all trades today would be $5,621.20 + $18,940.60 = $24,561.80 almost even with last update but with more booked profits.

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

Recent Trades (March 2019):

I bought to close 1 Jan 17 ’20 $90 PM Put for $7.5.
Profit of $832.10.

I sold 1 Jan 17 ’20 $65 WFC Put for $14.41
Revenue of $1441.

I sold 1 Jan 17 ’20 $65 CVS Put for $11.20
Revenue of $1120.

I bought to close 1 Dec 20 ’19 $145 V Put for $5.72
Profit of $1902.10.

I bought to close 1 Jan 17 ’20 $150 IBM Put for $17.65
Profit of $2044.10.

I sold 1 Jan 17 ’20 $47.50 GIS Put for $4.83
Revenue of $483

I bought to close 1 Jan 17 ’20 $95 TIF Put for $10.78
Profit of $1255.10

I sold 1 Jan 17 ’20 $62.50 CVS Put for $9.68
Revenue of $968

I bought to close 1 Dec 20 ’19 $145 V Put for $8.52
Profit of $1622.10

What to do if a trade isn’t working out:

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.

Example of a Roll Forward:

On 03/09/18 I sold 2 08/17/18 dated $75 Strike CVS Puts for $8.55 each, creating net revenue of $1,704.55.
On 06/04/18 I decided to buy back that same Put for $11.66 each, costing me $2,337.45 for a total net loss of $632.90.
I simultaneously sold a new Put on 06/04/18 for CVS with a $75 Strike expiring on 01/18/19 for $12.36 each, creating net revenues of $2,466.55.  So I show a realized loss of $632.90 but I’ve generated revenues of $2,466.55-$632.90 =  $1833.65.  Notice this is more total revenue than the original trade.  I was basically paid $.70 ($12.36-$11.66) x 200 (keep in mind each put/call is 100 shares) = $140 to push out the expiration date. 

Looking ahead

After December’s scare, I’ve slowed the pace a little and have tried to deleverage some. The markets are on a tear and I’ll likely keep buying back a few puts here and there to lock in the profits.

On 01/22/19 I rolled my 5 06/21/19 $75 MO Puts forward and added another 5. So I bought back the 5 puts for a $3,919.25 loss. However, I simultaneously sold 10 01/15/21 $65 Puts for $22.65. Those puts are currently valued at $14.6 each so my profit is $8,044.55 if I closed today and net profits would be right around $4,000. I closed one PM put recently and might lock in some gains on a couple of these, I’m waiting for the price of MO to appreciate a little more. I’ve received a LOT of revenue that I’ve already put to work in the market in the meantime. 

Since December I’ve added more shares in PFE, ABBV, T, MO, BAC, MDT. I’ve taken some profits on a few shares of V and sold a little XOM to prepare for a tax bill.

This is just another avenue I’m using to earn additional profits so that I can get this dividend snowball moving faster.  I broke my $18,000 forward dividend income goal by end of the year and am shotting for $21,000 by the end of this year. The extra options income is certainly helping speed up the process.  My forward dividends are currently $18,960 up from $17,840 since my last options update.  Just for reference, my forward income was $12,015 on 02/27/18.

Best long ideas currently are MO, V, BRK.B, DEO, DIS, WFC, BAC, T, CVS, ABBV