Options trading update – Jun 2021 – Record income

My third month of trading options

option premiums earned in June

In June I received $955 in premiums from trading options. That’s more than what I made last month. Yay. πŸ˜€

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. πŸ™‚

Here are the transaction details.

option premiums earned in June

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. πŸ™‚ 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. πŸ™‚

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

3 months of option trading

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. πŸ™‚

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. πŸ˜‰

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.

 

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Andrew
Andrew
06/28/2021 8:11 am

Love the transparency on your blog. You remind me of me a few years ago. Just remember when you sell leaps, there are silly tax rules. You have to claim the entire capital gain in the 2021 tax year and if you cover to close in 2022 you have to then submit a tax adjustment in the next to get some money back. https://ca.rbcwealthmanagement.com/documents/29328/29356/Taxation_of_options_transactions_04132018_high.pdf

livesinhiscar
livesinhiscar
06/28/2021 4:27 pm

One thing that I would like to see is a column for the Stock Price
at the time of the Option Transaction. This would just give an idea of how much
space you are giving yourself between the stock price and strike.

Arshia
Arshia
06/30/2021 10:36 pm

While you’re at it please add an additional column indicating the % difference between strike price and stock

DreamingOfDividends
06/28/2021 6:52 pm

Great job on the options premiums. Great job on the roll as well.

Although it’s 6 months out, I also traded a LEAP recently. I’m bullish on steel, so I bought a call and sold a put on CLF at the same strike price. The premium from the put paid for the price of the call.

David @ Filled With Money
06/28/2021 7:40 pm

Congrats!

My friends and I were also talking about this as a viable side income project… I wish I had way more time to look into these kinds of projects instead of using my precious time in trading hours to, you know, work for someone else to make them richer.

AlW
AlW
06/29/2021 4:24 pm

What do you think of the Stock Yield Enhancement Program provided by Interactive brokers?

Philosophers' Capital
07/02/2021 6:50 pm

Great post as always. My options knowledge isn’t what it used to be. Isn’t selling a unprotected put the same has doing covered call? Do you find that it actually juices your return or is it just hidden leverage doing the trick?

Graham @ Reverse the Crush
07/03/2021 8:30 am

Congrats on increasing your options income. I like your strategy to only trade options on stocks you would own. Thanks for the transparency and for sharing your strategy in such detail. It’s a great way to learn. I’m looking forward to more reports πŸ™‚

Potato
Potato
07/04/2021 7:34 am

How much time do you invest weekly on this? Interested to see what your hourly rate would be per hour πŸ™‚

Tawcan
07/04/2021 9:20 am

Very impressive options income Liquid.

I’ll admit that I’m still too lazy to start options trading to boost monthly income. :p

Mr. Dreamer
07/04/2021 10:44 am

You make me feel so bad by not taking advantage of this stream of income. I am going to have to put some time, learn more, then start the new stream of income. Indeed, trading only what I don’t mind owning.

Question. I see you are mostly doing it on US Market. Is Options trading on TSX isn’t a good idea? I hate the USD-CAD conversion and I don’t even own any US stock directly and would rather keep it that way.

Arthur Dubois
07/08/2021 8:32 pm

This is great to see! Love seeing the slow but steady progress month over month. I also like that you took Mr Buffet’s comment of “don’t test the depth of the river with both feet” to heart. I think your furture is looking bright in the world of options, best of luck to you!