Thursday, March 21, 2013

Recent Transaction

I'm reporting a trade from yesterday where I bought to close the $39 call option that I had open on HAL.  I'm way overweight HAL since they are my employer and I participate in the ESPP program and I need to start selling off some shares.  For now though, I figured it was pretty good to go on and close out the call option and I will sell another one shortly, most likely within the next week or so.

I had originally sold the call option back on January 30th and received $245.25 in option premium after all commission and brokerage fees.  HAL typically has moves larger than the market with a beta of 1.82 and it recently moved back down in price to the low to mid $39's.  This gave me the chance to close out the call for a nice profit.  In order to close out the position I paid $157.00, which after commission and fees cost me $164.98.  All in all the trade netted me $80.27 in option premium as profit which represented a 2.06% return or an annualized rate of 15.34%.

I'll be looking to sell another call option once the price recovers a bit because as I mentioned my portfolio is way overweight my employer's stock.  With another purchase finalizing in early April of around 90-100 shares I need to start unloading some and investing in dividend growth stocks.

I've updated my Option Summary page to reflect this change.  I've received a total of $184.29 in option premium from closed/expired options thus far in 2013 with my 4 open puts most likely expiring as well to add to that total.

4 comments:

  1. Nice work! You are really starting to realize some option profits in 2013! I am looking forward to seeing how your transition to options trading on margin accelerates your profits as you take on more options.

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    1. W2R,

      I'm already starting to see some pretty good returns from it, but it's a short sample period so there's no telling what will happen. Since my plan is to only sell options on companies I want to own at prices I would be interested in buying at anyways, I imagine that I'll do just fine. I'm thinking of closing out my BAC put, but since it was a shorter term contract the commission to close will eat a lot into the profit so for now I'm holding. Unfortunately that was a cash secured put so that $1,100 will just sit idly by.

      Thanks for stopping by!

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  2. That's a nice profit! I like your strategy of selling in-the-money calls to lower your HAL holdings. Like writing2reality said, I look forward to seeing more trades since you can now trade on margin.

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    1. AAI,

      I don't have a problem with taking a profit. My biggest sticking point is determining when I'm comfortable taking it. I think closing the KO was a good move because it had a nice run up and I could lock in a nice profit. Especially since it was a cash secured put because that also freed up $3,750. But the LO for example, I could close out today and capture ~45% of the premium in only about 15% of the days so that's tempting. Got any specific criteria for when you will close out the position or case by case basis I assume? That's how I'm taking it now.

      I'm hoping for a bounce back up in the markets over the next few days to allow me to sell another call on those HAL shares, most likely at the $39 strike again to rack up some more option premium.

      I made a purchase today and sold another put option using margin since I was able to free up some more cash by closing the KO put.

      Thanks for stopping by!

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