Options Trading Update – Dec 2021 – Yearly Summary

December options trading review

I received $1,586 in premiums selling options in December.

 

This brings my total premiums earned to $10,732 for the entire year. 🙂

I made one bad trade in October, selling a TD covered call. That move cost me $358 this month as I rolled my TD call option from $88 strike to $92, and extended the expiration by a month. This roll resulted in a net debit of $358 because I paid $721 to close my short position, and sold another call for $363.

Transaction details below:

Light teal = Roll
Light purple = Short Strangle

 

Despite the negative cashflow from the TD roll, I made a lot of premiums during this period.
And overall my net income from options reached a new high for the month of December. 🙂

 

I traded short strangles on 2 Canadian companies

Aecon Group (TSE:ARE). This is a construction company. I initially sold a put option with a strike price of $18. And it got assigned. So I decided to sell a covered call at $20, and sell another naked put at $16. This allows me to collect premiums from 2 options essentially. 🙂 ARE is currently trading at $16.99/share. Hopefully the stock stays within the $16 to $20 range.

Stella-Jones (TSE:SJ) is a lumber company. I initially sold a put option on this as well with a $40 strike price. That was in November. It expired in-the-money in December. So I wrote another put option at $38, and sold a call option at $43. Hopefully it stays within this range so both options expire worthless. 🙂 SJ is currently trading at $40/share. I made a video yesterday demonstrating how to place a short strangle trade order inside my brokerage account.

What is the point of using short strangles? It’s so I can do my “wheel strategy,” but at the same time continue to buy stocks when they dip lower and become cheaper.

The wheel is when you sell puts to buy stocks if they fall in price. And then you sell a covered call on those assigned shares to sell stocks at a higher price.

A short strangle is basically the part of the wheel strategy where you sell calls, with the addition of writing another put option at the same time.

As mentioned I hope ARE and SJ continue to trade within defined ranges. This strategy is neutral, and should be used when I believe the underlying stocks will not move up or down significantly. 🙂

 

2021 options summary

I’ve made a total of 133 option trades in 2021. That’s a lot of transactions. lol.

24 of those were call options, but the majority at 109 were put options.

My initial positions are always short. I look for options I can sell to earn a premium that’s worth the risk.
I only “buy” an option for the purpose of closing or rolling it out.

Out of 133 options, only 5 expired ITM and got assigned. 🙂

The growth has been pretty steady throughout last year.
But it appears I am reaching a plateau and will probably stay around $1,600 a month moving forward.

The income is limited by how much risk I’m willing to take with my portfolio.

I made just over $10K in net premiums trading options for 2021.

This year in 2022 I want to double my options income and reach $20K in net premiums. 🙂
This is after any losses and commission costs.

Will I be able to hit my goal? Only time will tell. 😀

 

______________________________________
Random Useless Fact:

They don’t music like they used to.

 

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DreamingOfDividends
01/03/2022 12:45 pm

Wow, impressive returns for the year!

D Investor
D Investor
01/03/2022 3:05 pm

Very impressive – great work!

Out of interest – how many hours do you think you spent in December on options trading?

If aiming for $20k net in 2022…do you think your hours spent will increase relative to the net or stay the same as you gain efficiency?

D Investor
D Investor
01/04/2022 6:01 am

Agreed – focus on learning first and you can always optimize the time spent later! Thanks for providing the regular updates.

AnotherLoonie
01/03/2022 3:56 pm

Great progress. Cool to see you adapting and learning what to do when things take a turn. Have you consdered buying some puts outright to help protect yourself in the event of a broad market downturn? I understand one can “buy insurance” which will reduce their profits but allow them to avoid getting wiped out if everything fell 15% or something like that.

Paul Jones
Paul Jones
01/09/2022 3:26 pm

I noticed you sold a call for ARE for $20, but only got a dollar in option premium, while spending 2.50 on the transaction cost. (I could be mis-reading the chart). What was the rational behind this? Was it so you could keep on doing the short strangle on paper?

Jay
Jay
01/18/2022 4:48 pm

Hello Liquid – I am interested in getting into options but not sure where to start. How did you learn to trade options and do you have any recommendations such as books etc to get going?

Jay
Jay
01/18/2022 6:57 pm

Thank you for the information – this should keep me busy for a little while!

Dave
Dave
01/20/2022 6:48 am

Curious what you intend to do if you get assigned the put on the strangle, would you still do another strangle? Seems like you could end up with a lot of stock.