Options for Income Week of May 15th
|Option Activity for the Week of May 15th|
Last week saw plenty of action in terms of closing options positions with another 20+ week in the books and over $500 of net profits. Considering there were some big losers in there as well I'm happy with how things turned out for the week.
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Union Pacific (UNP) - Put Option
This put option worked out wonderfully since I was able to take in nearly 50% of the maximum profit potential in less than a weeks' time. When you're active in the options market you just love the two sided action.
|Union Pacific (UNP) Jun 2017 Put Option - Closed|
SPDR Gold Trust (GLD) - Put Credit Spread
Sometimes the markets go against you and sometimes they work for you. My thought behind putting this trade on was that gold was due for a move higher, hence my bullish thesis on gold. I didn't think this one would work out quite as quickly as it did, but I'll take what the markets give me.
|SPDR Gold Trust (GLD) Jun 23 2017 Put Credit Spread - Closed|
SPDR S&P 500 ETF (SPY) - Call Credit Spread
I was a bit too aggressive with closing this position, but I can't complain if it leads to profits. Normally when I open a position I'll set a good til cancelled limit order at whatever profit target I have for that position. Sometimes though I happen to forget to adjust it since I tend to set orders with small profit targets if they come in quickly. But profits are profits.
|SPDR S&P 500 ETF (SPY) Jun 2017 Call Credit Spread - Closed|
SPDR S&P 500 ETF (SPY) - Iron Fly
Sometimes patience works for you and other times it works against you. This position hadn't been looking too good for pretty much the entire life of the trade. The S&P 500 had pulled back slightly nearing expiration which gave me the opportunity to close it out for a profit which isn't too bad considering it had been sitting at near max loss since early May.
Unfortunately had I waited another day when the markets happened to sell off over 1% I could have realized net profits somewhere around $200 on this trade.
|SPDR S&P 500 ETF (SPY) May 2017 Iron Fly - Closed|
V.F. Corporation (VFC) - Covered Call
Since acquiring shares of V.F. Corporation back in January I've tried to keep a covered strangle position on against the shares. Thus far that's worked out wonderfully as I've been able to reduce my cost basis by $4.65 per share including this closed call.
|V.F. Corporation (VFC) Jun 2017 Covered Call - Closed|
Junior Gold Miners ETF (GDXJ) - Put Option
My bullish thesis on gold and in turn the miners remains in tact. I took advantage of the decline in the junior miners in April to sell an aggressive put option against GDXJ and it worked out about as well as I could have planned.
|Junior Gold Miners ETF (GDXJ) Jun 2017 Put Option - Closed|
iShares Silver Trust (SLV) - Iron Fly
The problem with defined risk strategies is that whenever they go against you there isn't really much you can do. Especially if the underlying's price blows threw the spread.
|iShares Silver Trust (SLV) May 2017 Iron Fly - Closed|
Bank of America (BAC) - Covered Call
The great thing about options, especially in a tax sheltered account, is that you can write options against the shares in order to reduce your cost basis which is exactly what happened with this trade.
|Bank of America (BAC) Jun 2017 Covered Call - Closed|
SPDR Dow Jones Industrial Average (DJIA) - Call Credit Spread
As far as the overall markets are concerned I still feel that the valuations are stretched especially when you consider that growth across the economy as a whole is still meager at best.
|SPDR Dow Jones Industrial Average (DJIA) Jun 2017 Call Credit Spread - Closed|
iShares Russell 2000 ETF (IWM) - Call Credit Spread
Sticking with my bearish theme I went with a call credit spread against the broader Russell 2000 ETF, IWM.
|iShares Russell 2000 ETF (IWM) Jun 2017 Call Credit Spread - Closed|
Sector Select SPDR Technology (XLK) - Put Credit Spread
The technology sector has been leading the market higher over the last few months. Despite my bearish leaning on the broader market I wanted to diversify my options portfolio a bit with a bullish position in technology.
|Sector Select SPDR (XLK) Jun 2017 Put Credit Spread - Closed|
iShares Russell 2000 ETF (IWM) - Iron Fly
This trade went about as poorly as a trade could have. It originally started out as a call credit spread above the market. After IWM moved higher through the long call of that spread I added on a put credit spread to bring in more capital and reduce my risk by converting the position into an iron fly.
|iShares Russell 2000 ETF (IWM) May 2017 Iron Fly - Closed|
Exxon Mobil (XOM) - Put Broken Wing Butterfly
Over the last few weeks I've been experimenting with some new defined risk positions namely the broken wing butterfly. What I like about this trade is that if done for a credit you can turn a profit despite the underlying going against your thesis and if it cooperates then your profits jump to a much higher level.
|Exxon Mobil (XOM) May 2017 Put Broken Wing Butterfly - Closed|
Facebook (FB) - Put Broken Wing Butterfly
Like I mentioned earlier the technology sector has been leading the charge over the last month or so. I went with the put broken wing butterfly, which is actually a bearish position, that happens to have no risk should the underlying continue higher.
|Facebook (FB) May 2017 Put Broken Wing Butterfly - Closed|
Lowe's Companies (LOW) - Put Ratio Spread
Technically this was a put broken wing butterfly, but my plan going into the trade was to treat it more like a put ratio spread.
|Lowe's Companies (LOW) May 2017 Put Ratio Spread - Closed|
Hormel Foods (HRL) - Covered Call
I was tempted to just let this one roll off since I closed it the day of expiration; however, I decided to roll the position forward a month because there was some hefty premium to be had in June's $35 strike call option.
|Hormel Foods (HRL) May 2017 Covered Call - Closed|
Qualcomm (QCOM) - Put Option
This position started off as an earnings play gone bad that I then rolled out in time. Unfortunately there wasn't a $55.50 strike in the May expiration cycle so I had to move it down to the $55 strike while paying to roll which I never want to do.
|Qualcomm (QCOM) May 2017 Put Option - Expired OTM|
iShares Silver Trust (SLV) - Covered Call
This trade was originally part of a covered straddle I had written on the shares of SLV that I had previously acquired via a put option. Since SLV was well below the $17 strike of the call option this call option expired OTM and I'm able to reduce my cost basis by the premium received. That lowers my cost basis on my SLV shares from $17.18 to $16.74.
|iShares Silver Trust (SLV) May 2017 Covered Call - Closed|
Cisco Systems (CSCO) - Covered Call
After acquiring 100 shares of Cisco at the end of March I've been selling call options against those shares in order to collect additional premium to lower my cost basis. This is the first call option I wrote against those shares and with it expiring OTM this reduced my cost basis from $33.62 per share to $33.19.
|Cisco Systems (CSCO) May 2017 Covered Call - Closed|
SPDR Gold Trust (GLD) - Put Credit Spread
No this isn't a typo I did put on the exact same trade with a different expiration. Both of those are now closed for profits.
|SPDR Gold Trust (GLD) Jun 2017 Put Credit Spread - Closed|
Visa (V) - Put Credit Spread
I'm bullish on Visa and think it's one of the best companies to own for the next 20 years if you can purchase shares at a reasonable valuation. Unfortunately that hasn't been the case recently and shares are quite expensive in my view. However, I don't see any reason for the shares to pull back unless the markets take a dive so I'm riding the bull thesis on Visa with put credit spreads while waiting for better purchase opportunities.
|Visa (V) Jun 2 2017 Put Credit Spread - Closed|
Johnson & Johnson (JNJ) - Put Credit Spread
Johnson & Johnson is known for its stability and steady rise higher over time. Similar to the Visa position I'd love to increase my stake just at a better valuation. So until the markets turn for whatever reason I'll take small bullish bets on the companies that I want to own.
|Johnson & Johnson (JNJ) Jun 9 2017 Put Credit Spread - Closed|
ProShares Trust Ultra Short VIX (UVXY) - Call Debit Spread
This was my first solo debit spread and I have to same I'm pleased with the results. Of course the result doesn't really mean anything with just one occurrence to base it off of; however, profits are profits so this was a good trade.
If you recall volatility, via the VIX, had been noticeably absent from the markets and the index dipped below 10 a few weeks back which was nearly an all-time low. At historically low volatility levels I had decided to put on a bullish play on rising volatility via the call debit spread on UVXY.
|ProShares Trust Ultra Short VIX (UVXY) Jun 2017 Call Debit Spread - Closed|
This position generated net profits of $77.32. Since the capital at risk was what I paid to enter the position, $206.34, that's a solid 37% return on capital in just over a week. Not bad at all.
Cisco Systems (CSCO) - Put Option Earnings Play
This was an earnings play gone bad after Cisco gave weak guidance and the shares sold off on the news. After Cisco reported I was trying to roll this position out in time in order buy some more time, but I couldn't do so for a credit. Or at least not one that was worth doing as even going out until late June I could only pick up an additional $0.01 per share in option premium. Since there wasn't much to be gained by rolling out I just let the option expire ITM and have the shares put to me.
|Cisco Systems (CSCO) May 26 2017 Put Option Earnings Play - Executed|
Even though I receive the option premium up front when selling options, I don't count the premium as profit until I close the position or it expires.
My option profits are churning along nicely through the first three trading weeks of May. Thus far I've generated net profits of $1,624.97 in May. Year to date my net profits are at $7,763.51.
I've updated my Option Summary page to reflect these changes.
Do you utilize an option strategy to generate investment income in addition to the dividends your positions provide?
Please share your thoughts below!