Monday, 18 August 2014

Option Expiration - August 2014

When I placed my trades, I received a total of $3,452.30 option premiums (after commissions). As the market began to decline, my margin became very thin. On July 31, I closed my two largest positions (PG and XOM) for a profit; at a cost of $249.98 ($154.99 + $94.99).

By mid July, my YUM $72.50 short puts were in-the-money. I did not wish to take assignment to own 1,500 shares. The day before expiration, I bought to close my 15 contracts for $3,133.74 and sold 15 Sept $72.50 for $3,886.17 for a credit of $752.43.

My ten remaining positions remained open and expired worthless.

The following is a list of my expired option positions. Premiums are the amounts of cash I received after commissions. My option premiums are included as income in my monthly blog posts at the date the income is received.

Date              Position           Premiums

06/27/14   10P  ALA  $48            $727.51
07/11/14     5P  CPG  $42            $163.76
06/20/14   10P  CVE  $31            $137.51
06/20/14   10P  GIS   $47.50         $97.50
06/20/14   15P  PEP   $80            $211.25
06/02/14   20P  PG     $70            $305.00 closed
06/20/14   10P  SBUX $67.50     $237.50
07/21/14    3C    SU   $46            $127.26
06/20/14     5P  TGT  $55            $163.75
06/20/14   10P  TRP   $48            $217.51
06/06/14   20P  XOM $85            $285.00 closed
06/20/14   10P  XOP  $70            $357.50
06/20/14   15P  YUM $72.50       $421.25 rolled

Ticker Symbols

* TSX listed stocks and options are listed in Canadian currency and the remainder are listed in US currency (exchange rates may vary)

ALA - AltaGas Inc (TSX)
CPG - Crescent Point Energy (TSX)
CVE - Cenovus Energy (TSX)
GIS - General Mills
PEP - PepsiCo
PG - Proctor & Gamble
SU - Suncor Energy (TSX)
TGT - Target Corp
TRP - TransCanada Corp (TSX)
XOM - Exxon Mobil Corp
XOP - Oil & Gas Exploration ETF
YUM - Yum Brands


  1. Nice Blog I'm a newbie can you tell me how you started and decided on which companies to select and risk management etc. how would you start with only $10k as it seems you have a much larger acct. I can't wait to read your post when you hit $1mm or more! Good Luck

    1. Hi Rick D, I'm glad you enjoy reading my blog.

      I began investing on my own in '08, after having a few bad experiences with advisors. After the market correction in '09, I switched my strategy; selecting stocks based on income rather than stock price appreciation.

      The toughest part about investing was to determine my tolerance and capacity for assuming risk. In the beginning, I was taking too much risk. trading based on my emotions; following the advice of others; and investing in things I did not understand or research.

      In my opinion, $10K is enough to begin investing (assuming you do not need the money in the short-term). However, I am not a financial planner, investment advisor, etc. Therefore, I would not feel comfortable offering you or anybody specific advice.

      I hope you do very well; and I also hope you will enjoy owning stocks as much as I do.

  2. Hi Crystal... thanks for sharing your income streams! Do you usually SELL PUTS far out dates or closer ones? Looks like you do a big batch at a time... you're one gutsy lady. Seems like you're rolling in the option premiums easily!

    1. Hi PC, Thanks for your comments.

      When I began selling puts, I sold deep out-of-the-money with far duration (eight months or longer). Although they were not cash secured, my intention was to take assignment on expiration to accumulate quality stocks on weakness.

      In 2013, I made changes to my investment strategy. Rather than focusing on accumulating additional shares to grow my future dividend income, I started creating an additional source of income from option premiums. Presently, I place fewer long-term option trades and a higher number of positions expiring two months in duration. If my positions are in-the-money on the date of expiration, I will roll them to a future date.

      Although I am selling a higher number of contracts, this strategy is not high risk. For instance, if I sell puts 10% out-the-money, it is more likely to expire worthless in the short-term because market is less likely to fall 10% in 2 months than in 8 months or 2 years.

      I hope this information is helpful.


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