Options for Income Week Ending June 2nd
|Options for Income Week Ending June 2nd|
I've been testing out ways to generate investment income via option trading because the income can be substantially higher. If my experiment proves viable over different market cycles I would have no problem using options as a way to supplement our income if it would allow us to reach financial independence faster even if that means a more active approach is required.
Last week started off pretty slowly for my options trading, but by the end of the week it ended up being quite busy. Unfortunately, this wasn't exactly a good week for generating option profits due to some losing positions. However, thanks to diversification among underlyings and strategies it was still a profitable week.
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TastyWorks is really geared toward options traders with $1 per contract commissions and $0 to close; however, even for just long term dividend growth investors it's an intriguing choice. For stock purchases commissions are $5 to open and $0 to close which is still much lower than just about every brokerage out there. If you're interested in opening an account with TastyWorks I'd appreciate it if you do so through this link.
Tesla (TSLA) - Put Credit Spread
Tesla's run over the last month or so has been truly amazing. Unfortunately I closed this position out way too early since Tesla continued its move higher not long after I closed this position out.
|Tesla (TSLA) Jun 23 2017 Put Credit Spread - Closed|
SPDR Gold Trust (GLD) - Put Credit Spread
I honestly didn't want to close this position out when I did and messed up the closing order when I put it in. To start the closing order I used my brokerage's "close @ profit %" function and apparently didn't adjust it to reflect what I actually wanted to take out of the position. Ooops! Unfortunately this wasn't the only position I did this on either.
|SPDR Gold Trust (GLD) Jun 2017 Put Credit Spread - Closed|
V.F. Corporation (VFC) - Put Option
Since acquiring shares of V.F. Corporation earlier this year I've continually sold options around the position in order to take in more premium and reduce the cost basis on my shares. So far that's worked out great as I've been able to reduce my basis from $53.50 to $48.85 or around $4.65 per share.
|V.F. Corporation (VFC) Jun 2017 Put Option - Closed|
Micron Technology (MU) - Put Option
Micron continues to have high implied volatility in its option prices and with it's low per share price and generally bullish short/intermediate term business outlook I'm more than happy to use the company as a way to generate option income.
|Micron Technology (MU) Jun 23 2017 Put Option - Closed|
J.M. Smucker Company (SJM) - Put Option
I opened this position on a Wednesday, but by Friday it was time to take it off. Normally I don't expect to be able to take a good chunk of option premium as profits in such a short time, but if the markets work with me then I'll gladly take it.
|J.M. Smucker (SJM) Jun 2017 Put Option - Closed|
iShares MSCI EAFE (EFA) - Put Credit Spread
This trade worked out wonderfully and I was able to close it out for nearly 50% of the maximum profit in a fairly short time frame. Unfortunately in this account I've been having to widen out the spreads on my trades because there just isn't enough premium coming in to make closing the positions out worthwhile. Sadly that comes with higher risk since many of these are directional bets too.
|iShares MSCI EAFE (EFA) Jul 2017 Put Credit Spread - Closed|
Amazon (AMZN) - Put Credit Spread
Many of my short option plays, bets that the market would decline some, were struggling mightily. So I started putting on some bullish plays in some of the companies that never seem to go down.
|Amazon (AMZN) Jun 2017 Put Credit Spread - Closed|
iShares MSCI EAFE (EFA) - Iron Condor
In hindsight I probably should have just let this one play out and see if EFA happened to come back into the profitable zone. But I decided to just throw in the towel on this position because I was frustrated with how several of my positions were going.
|iShares MSCI EAFE (EFA) Jun 2017 Iron Condor - Closed|
SPDR S&P 500 ETF (SPY) - Put Credit Spread
I originally put this position on to try and have some positions that would benefit from a continued increase in the markets. Little did I know that I would be taking it off just a couple days later after reaching my profit target.
|SPDR S&P 500 ETF (SPY) Jun 23 2017 Put Credit Spread - Closed|
Nike, Inc. (NKE) - Put Option
I was surprised to check my account on June 3rd to see that my short put option against Nike was executed early. It's not too surprising considering it was well in the money; however, since there was still 2 weeks until expiration I figured I still had time to try and roll it out to pick up more premium. Alas that wasn't to be.
|Nike, Inc. (NKE) Jun 2017 Put Option - 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.
I only generated net profits of $135.82 for the week ending June 2nd. That was a fairly significant decline compared to how the last couple months have been, but it was still a profitable week. For the month of May I realized net profits of $2,288.67 which was my most profitable month yet. The first 2 days of June saw a minuscule gain of just $2.76. Year to date my option profits are at $8,429.98.
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!