Income From Options

Income From Options Automoto!

09/21/2016

Last Friday, September 16, 2016, was the third Friday of the month, and that means options expiration day for us. This is when we take stock of how our expiring trades performed. We had a total of 8 trades set to expire. Of those trades, 4 were in the money (the stock price was below the strike price), and rather than be put those stocks, we chose to roll those trades forward to a future expiration date (per the alert sent on Thursday the 15th) and make a little extra income in the process. The other 4 trades expired worthless, so we got to keep the premium with no further obligation.

The 4 trades we rolled forward were: AWK $80 put to 16 Dec 16, CLB $110 put to 21 Oct 16, CPB $60 put to 21 Oct 16, and PVG $12 put to 21 Oct 16.

The 4 trades that expired worthless were: GT Sep $35 put for a 19.8% annualized gain, KHC Sep $87.5 put for a 14.6% annualized gain, STZ Sep $160 put for a 7.9% annualized gain, and VLO Sep $52.5 put for a 13.3% annualized gain.

This brings our completed trades record to 97 winners out of 101 trades.

09/02/2016

August 19, 2016 – Of the six options set to expire this month, two were out of the money (the stock closed higher than the strike price). We let those two options expire; the EOG Aug $80 put gave us a 20% annualized return, and the STZ Aug $160 put returned 16.5% annualized.
The remaining four options were all in the money (the stock price was lower than the strike price). Three of them were only slightly lower than the strike price, and we were able to buy the puts back (Buy to Close or BTC) and still make a profit on the trades instead of being put the stocks. The three options were AMT Aug $115 17.3% annualized, CHRW Aug $70 put 22.8% annualized, and SSRI Aug $15 put 79.1% annualized.
The last option, the AWK Aug $80 put, was not profitable to buy back, so we had the choice to either be assigned the stock @$80 or roll the option forward (BTC the Aug put and STO a Sep or later put), and most brokers will let you do the latter as a single combined trade. We decided to roll the option forward to September for a net credit of .10¢.
This brings our current trading record to 93 winning trades out of 97 completed trades. That works out to a 96% win rate.

August 23, 2016 – Released seven new option trades for subscribers to follow today.

07/16/2016

Yesterday was the third Friday of the month - option-expiration day. It is the day we see if our option positions are successful or not.
When an 'Income From Options' trade is successful, we can officially record the profits. When it's not, we can either Buy the puts back, roll the option forward or take assignment of the stock and then sell covered calls on the stock to earn more cash to turn it into a successful trade.
When we sell puts, we get paid up front for agreeing to buy shares of a stock at a lower price. When we sell covered calls on shares we are assigned, we get paid for agreeing to sell those shares at a higher price.
We have seven option positions expiring this month. All of our expiring options were puts:
First Majestic Silver(AG) 15Jul16 $12 puts expired worthless for a 5.4% return in 22days or 89.9% annualized.
Freeport-McMoRan(FCX) 15Jul16 $10 puts expired worthless for a 2.3% return in 25days or 33.9% annualized.
Eli Lily(LLY) 15Jul16 $71 puts expired worthless for a 1.3% return in 25 days or 19.0% annualized.
M&T Bank(MTB) 15Jul16 $110 puts expired worthless for a 2.2% return in 53 days or 15% annualized.
NovaGold(NG) 15Jul16 $6 puts expired worthless for a 4.0% return in 22 days or 66.1% annualized.
Nike(NKE) 15Jul16 $57.50 puts expired worthless for a 4.4% return in 88 days or 18.1% annualized.
Pretium Resources(PVG) 15Jul16 $9 puts expired worthless for a 3.3% return in 22 days or 55.3% annualized.
I'll have a few picks coming out Tuesday the 19th, although the returns will probably be lower than usual. With the VIX closing 12.67, it's hard to find decent option premiums without taking too much risk.

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