February options trading update
I earned $7,403.73 in net premiums after commission this month.
Most of this was thanks to the higher than average volatility in the stock market. 🙂
Higher implied volatility increases option premiums, translating into more income for option sellers like myself.
Video breakdown of trades
I produced a video explaining my individual trades for the month, including a live demonstration selling a Tesla put option using Interactive Brokers, and collecting $211.
You can watch that here, or see below. 🙂
- I sold 24 Puts which is a record. I just couldn’t help myself. The premiums were too good to pass up.😅
- I rolled 5 options forward, including a new $SHOP put option.
- I had 1 option expire in the money and get assigned, my $30 Lightspeed put option. This means I now have 200 shares of $LSPD, and my average cost dropped from $70/share to $50/share. 🙂 There were no other assignments because I rolled the rest, lol.
- My largest net earnings came from selling puts on $SHOP, $MELI, $BABA, and $BLK.
Teal = Roll
Purple = Short strangle
Peach = Put spread
Green = Risk reversal
I should stop selling covered calls on TD. I originally thought the stock would pull back because it’s overvalued. However, it continues to surprise me how resilient the stock is. The implied volatility is fairly low so I will not be trying to guess this stock’s movement going forward. That being said, if TD.TO (currently at $105/share) falls to below $95/share again I will be a buyer. 🙂
I bought a $590 Shopify put option on February 16th to protect myself against downside risk. However I later sold this option to make a profit and close out my position. That was a mistake because $SHOP dropped a lot in early morning trading last Thursday. Instead of selling it for $349 on Wednesday. I should have waited until Thursday to sell it for $1,300 at least. In this case I should have kept my hedge for a little longer. 😅
Last week the volatility index (VIX) peaked above 30, which is quite high. I don’t expect markets to continue being so volatile next month so my options income would probably revert back to normal.
For long term investors the good news is whenever the VIX rises above 30 for a period of time, the stock market has historically produced very high returns over the next 500 days. So if being in the middle of a market correction doesn’t feel good now, at least we can be optimistic about the future. 🙂
Random Useless Fact: