August options trading review
This month I received $1,169 in premiums from trading options. This is another new record for me!
In today’s post I’ll break down my trades for August.
Here are some key points from this month.
- I sold 11 options, all Puts.
- I bought a put option as part of a spread. More on this below.
- My total trading commission was $17 for the month.
- All options that expired in August were out of the money. 🙂
Below is a table detailing my transaction details.
- Initial underlying price – The market price of the underlying stock/ETF when I made the options trade.
- Price difference % – How much the underlying will have to rise or fall to be in-the-money (ITM).
- Initial days to expiry – How many days remain until the option expires, from the day that I traded it.
- Initial Delta – Delta measures the probability of an option expiring ITM. For example, if a put option has a Delta of -10%, it means there is a 10% chance it will get exercised, and a 90% chance it’ll expire worthless.
My first options spread
A put spread is an option spread strategy that is created when equal number of put options are bought and sold simultaneously.
Normally when I sell put options I do not have a bottom line. If the stock drops 99% I still have to buy it.
But in order to reduce risk I could buy a put option with a lower strike price than the one I plan to sell. Simultaneously buying and selling put options on the same underlying, with the same expiration date is a put spread. 🙂
The stock I used for my first put option spread is Berkshire Hathaway because it’s a large conglomerate so it should be a pretty safe choice.
I basically sold a $250 Put. And bought a $200 Put. This means I am protected if BRK.B drops below $200 per share when the options expire in September.
I earn less premium with a put spread compared to a simple put option because buying a put costs money. But it’s less risky.
Options trading at a glance
Since I started in April I’ve traded over 30 options that have already expired. Surprisingly none expired ITM.
I like to play it safe and choose trades with conservatively low Delta values. 🙂
So far I have earned $4,733 from option premiums. This is before capital gains tax.
Thanks for joining me on my options trading adventure. I hope to continue trading options in September and keep doing my “Wheel” strategy.
Random Useless Fact:
The Hawaiian pizza was a Canadian invention by Sam Panopoulos.