JPM, SSO, SLB, TNA
FROM THE JOURNAL: Friday, July 13. 2012
+5 Jul 21Weekly(8 days to expiration) 34 Puts @ .12
This fill is from a standing order to close out (Buy to Close, GTC) this option when it hits 15% of the premium received. These orders are always placed immediately after the original fill. Then we just wait until it triggers and we are taken out of the position and book the profit.
We sold these puts on 7/12 (yesterday) for .92, or $460, and automatically covered today, 7/13 for .12, or $60. In one day we were able to book a profit of $400. Monday we may get an opportunity to sell more put premium with a Friday expiration, which will allow us to double dip on the week. Double dipping is good because it pours more premium into our trading accounts and moves up our total annual yield percentages.
-2 Jul21(8 days to expiration) 54 Calls @ .76
We were looking for a nice up day in order to sell call premium to the extent of the 200 shares we own. Today was the day. Up days puff up call premium. Down days puff up put premium. Sell calls on up days and puts on down days.
Our order filled at .76, or $152. The stock closed at $54.11. Our CPS is $56.63.
+3 Jul 13 Weekly(1 day to expiration) @ .10
This order triggered off our preset 15% earned limit and covered the position. We originally sold these short puts on 7/5 for $189.78.
-3 Jul 21 Weekly(8 days to expiration) 67.5 Calls @ .83
-3 Jul 21 Weekly(8 days to expiration) 65 Puts @ .72
We sold this naked strangle to get on both sides of the underlying for the week ahead, raking in $465 in the process. SLB is a premier stock and we do want to own it. In the meantime, we will reduce our cost per share in as many cycles as we can.
-3 Jul21 Weekly(8 days to expiration) 57 Calls @ .50
-3 Jul21 Weekly(8 days to expiration) 51 Puts @ .55
Opened this new position and received $315 in premium.
+3 Aug18(36 days to expiration) 45 Puts @ .25
This fill was triggered by our preset 15% limit and closed out the position in MWE…for the moment. We sold these puts on 6/28 for $1.50, or $450, and bought them back today for .25, or $75, netting $363.
Volatility is very quiet in this stock so we will not put on new positions in MWE until that changes.
WHAT HAVE WE ACCOMPLISHED?
Net Premium (including commissions) sold in past three weeks:
SOLD BOUGHT NET
$ 9,389.63 $ 3,735.84 $ 5,813.79
$ 10,279.13 $ 1,574.00 $ 8,705.13
$ 6,758.28 $ 2,855.99 $ 3,902.29
$ 26,427.04 $ 8,005.83 $ 18,421.21
These numbers are below target so next week we will pick up the pace.
Thank you! It seems so obvious now.
Thanks for the comment and the good observation. I was writing in the shorthand we use here not realizing it would take a code breaker to figure it out, so it is good you pointed that out.
We began including days to expiration in order to eliminate as much confusion between weeklies as possible, as our portfolio holdings list gets longer and longer and interpretation can get a little chaotic, especially in the heat of battle.
We found we were making mistakes in order entry because one weekly pretty much looks like any other weekly. So in an effort to bring order to the process, we began including the days to expiration in our log, so we can categorize at a glance whether the option belongs to the old week or the new week. Compounding the problem, our software matrix displays columns of option pricing for the weeklies, or even our position status, with only the days to expiration as column headers. Mostly because of the software, Days to Expiration became the basic way to differentiate between the old week column and the new week column. By including the Days to Expiration, we found order entry errors are virtually eliminated as the DTE keeps us in the right week.
In the example you listed, the Weekly(10) does refer to the regular MONTHLY option which became a Weekly option on day 9. We were a little ahead of the curve by calling it a Weekly on day 10. Strictly speaking, it was a regular monthly option at the time of the transaction (Day 10), but at the 9 day level, it became a Weekly option. That happens once each month where the weekly expiration date coincides with the monthly expiration date.
We like that aspect because it sometimes allows us to get a jump on the premium to sell, or take advantage of the premium relationships between different strikes to allow an adjustment just ahead of the weekly.
In future posts we will include the option expiration date and the days to expiration on all orders to make it easier to discern which option we are listing. I have corrected the format in the last post.
I hope that answers your questions, Tom. Any further questions or comments, do not hesitate to post. Thanks again for the comment and happy trading.
JPM, SSO, EEM, COP, EWZ
FROM THE LOG: Tuesday, July 17, 2012
No action on Monday
Tuesday was a reaping, or harvest, day
+5 Jul21W(4days to expiration) 36 Calls @ .05
Sold these calls on 7/12 for .33, or $165. Options were covered today automatically by a preset order at .05, or $25. It appears to not be much profit, but our Cost per Share is steadily declining and we will take whatever the market gives us. Our Cost per Share is $40.94. While still above today’s close at $34.99, we are getting our CPS into good territory.
The announcement of more trading losses at JPM didn’t seem to affect the underlying much. We would like to see a little volatility to juice up the premiums. Either way, we will sell more premium when the weekly options are created on Thursday.
+4 JUL21W(4) 52 Puts @ .11
Our Cost per Share is $57.03. We sold these options 7/11 for .70, or $280. Automatic cover today for .11, or $44. Our 54 Call is In-the-Money but we will wait and see what happens between tomorrow and Friday.
+5 Jul21W37 Puts @ .05
We sold the 37 Puts and 38 Calls 7/12 for .78, or $390. Automatic cover for the Puts today for .05, or $25.
+2 Aug18 50 Puts @ .21
Sold these Puts 5/55 for 1.41, or $282. Automatic cover today for .21, or $42.
+5 Jul21W(4) 50.5 Puts @ .20
Automatic cover today for .20, or $100. We sold these weekly options 7/12 for $691.
Opportunity to double dip for the week may present itself tomorrow.
Our program of selling weekly options is working well and we are hauling in significant premium on a fast cycle basis.
We may be traveling over the next three trading days so updates will come as time permits.
TZA, SLW, CAT
FROM THE LOG: Wednesday, July 18, 2012
The following Buy to Close transactions were filled by preset automatic orders.
+10 Jul21W(3 days to expiration) 19 Calls @ .07
+3 Jul21W(3) 25 Puts @ .06
+2 Jul21(3) 82.5 Puts @ .55
Tomorrow is weekly option creation day where we will likely sell much more premium and adjust some of our remaining positions into more premium. Monday, Tuesday and today have been reaping days. Tomorrow and Friday should be sowing days.
We are keeping our eye on events in the Middle East.
Some experts believe the possibility of a strike against Iran by the Israeli military is high and could happen at any time as the "window" is closing for Israel to stop Iran's nuclear program.
The threat of an escalation is real. And if Iran is struck, the price of oil will skyrocket. So will the price of everything associated with oil…even the pipelines which have little to do with Iranian oil. What exactly would this do to the price of oil, the world economy and the stock market?
What are the implications for the Euro, Dollar and Gold?
Iran has already threatened to retaliate against Israel and the US. What form would that retaliation take?
What will President Obama do about a nuclear Iran? Will he wimp out as usual?
In recent weeks, the U.S. has been quietly but dramatically increasing its naval and military forces near Iran.
Iran continues to secretly enrich uranium amid reports that it is pushing forward with its nuclear weapons program, while diplomatic talks to thwart Iran's program and stop pre-emptive Israeli airstrikes have so far failed and will continue to fail. In order to have a successful negotiation one must have sides who WANT to solve the problem. Iran does not.
We need to know what is going to happen before it happens…not easy to do…but, we do not want to get caught unprepared on this one.