My third month of trading options
In June I received $955 in premiums from trading options. That’s more than what I made last month. Yay. 😀
Here are some key points from my options trades this month.
- I sold 13 options, 11 Puts and 2 Calls.
- I rolled my first call option. (highlighted below, CNQ)
- My total trading commission was $20.74.
- I’m continuing with the wheel strategy that I started last month.
- 11 options from previous months expired in June. All 11 expired worthless. 🙂
Here are the transaction details.
Proceeds – commissions = $955.49
Most of my options have the letter “P” at the end – for put options. By selling Puts, I have to be okay taking ownership of the stock at the predetermined strike price. For example, if Disney shares drop from $175 today to $135 by August 20, 2021, I have the obligation to buy it at $135/share.
I chose to trade these options because I already like the underlying stocks. Options allow me to potentially buy the shares cheaper than the market price today. 🙂 I don’t trade options of stocks that I don’t intend to own.
I did a roll-up-and-out on my Canadian Natural Resources (CNQ) covered calls. This means I closed my initial option and simultaneously opened another at a higher strike price with a later expiry date. The reason for the roll was because my option was expiring at the money with a strike price of $44. By rolling it to $45 and expiring next month I received a small gain (income) and get to keep my shares, for now. 🙂
I don’t plan to roll CNQ again. At $45 I think CNQ.TO is over priced. My covered calls represent 200 shares. I currently own 630 shares.
If you’ve been following me for awhile you probably remember I purchased CNQ.TO at $15/share last year. If the stock price grows to $45/share, I will happily take some profits off the table. No regrets.
Total income from option premiums
Altogether I have made $2,500 trading options since April. I originally aimed to make $750 a month in my first year of trading options. It looks like I am doing okay. 🙂
Warren Buffett once said, “never test the depth of the river with both of your feet.” That’s why I’ve only been using simple and conservative options strategies such as selling Puts with very low Delta. But now that I have some experience writing options, I feel like I can take on some more risk.
So moving forward I would like to try selling a LEAP, which is an option that has 1 year or longer to expiration. The premiums can be very attractive, often $1,000 per contract for some stocks. But there’s a lot of downside risk as well. So I have to choose the underlying carefully. 😉
My other investments such as Bitcoin haven’t performed very well lately.
But when things don’t always go the way I want, it’s nice to know I have options. 😎
Random Useless Fact:
Having the internet at our fingertips is both a blessing and a curse.