Saturday, May 20, 2017

Expiring Options for May 19, 2017

Ouch!  The markets took a sharp dip thanks to the drama at the White House on reports of Trump asking FBI to stop investigation of the Russian involvement in the election causing investor to worry if Trump will finish his term as President.  The fear and volatility shot up.

Earlier this week, I had open two more bull put spread on $AAPL and $FB for next Friday, May 26th (I did not blog about these trades).  They took a nose dive and hoovered just below my strike price!  My short puts were being tested for $IWM and $TEVA.  I should have closed them the previous day for profit, but as always, I let my greed take over and held them.  

I saw a big gap down in my overall portfolio due majorly to the four options. On down days, I tend to ignore and observe when I should be making adjustments or making trades.  The next two days, the market showed signs of improvement and my options were looking much better.

Below were my options expiring for May 19, 2017:

OptionAccounts (Position)
GILD 19MAY2017 68 C48(-1)
KO 19MAY2017 44 C18(-1)
KR 19MAY2017 32 C20(-1)
SBUX 19MAY2017 52.5 P75(-1)
TEVA 19MAY2017 35 C23(-1)
TEVA 19MAY2017 32.5 P-124(-1)
V 19MAY2017 87.5 P-83(10)
V 19MAY2017 90 P300(-10)
WMT 19MAY2017 77.5 C41(-1)
Most of my options expired worthless except for $TEVA.  I realized $318 in option profits!

The put on $TEVA was actually doing well until Wednesday collapse.  $TEVA did not recovery.  I am quite disappointed as I could have closed it for a $50 profit earlier in the week!  It closed at $29.88 per share.  This is well below my strike price of $32.50.  I did not want to take an assignment and put more funds towards this stock so I closed my put for a loss of $124 and re-opened another put in December with a lower strike of $30 and collected a premium of $310.  This is just a waiting game now.  

Unfortunately, I had to say goodbye to my $WMT as it made a strong finish towards Friday's finish.  It closed at $78.77 per share.  I held $WMT for over a year when it was trading below my put assignment @ $72.50.  I collected dividend mostly through this time as the premiums for selling calls were always on the low side when it was trade below $72.50 per share.  Currently, I still have two short puts on $WMT expiring Jan2018.  They were from a roll from two years ago.  I will take the profit for now.  I have an inkling that $WMT will take off and I'll be left behind in their dust as always when I sell covered calls!

Friday, May 12, 2017

Expiring Options for May 12, 2017

OptionAccounts (Position)
AMZN 12MAY2017 970 C(-10)
AMZN 12MAY2017 975 C(10)
BMY 12MAY2017 56 C(-1)
FB 12MAY2017 145 P(10)
FB 12MAY2017 148 P(-10)
NVDA 12MAY2017 94 P(-1)
TD 12MAY2017 64 P(-1)

I did really well this week.  My $AMZN and $FB bull put spreads expired worthless plus my $7 gamble with $NVDA.  I could have made even more money if I held my $NVDA call @ $114 strike till today, but as always, I close my position too early and left off $1000 off the table DOH!!  

My short put for $TD.TO will get assigned as it closed under my strike price of $64. (closed at $63.10 as of May 12).  I decided not to roll my short put out to a different date.  My average cost for $TD.TO is $63.68 ($64-$0.32 premium collected).  I plan on selling calls against my shares to lower my cost base.

Thursday, May 11, 2017

How to make USD dollars?

Once upon a time, Canadian dollar was at par with American dollar.  Those were the good old days!  Fast forward to today:

Canadian Dollar equals
0.73 US Dollar
Chart of exchange rate values over time

I save my hard earned income from my 9-5 job to invest in stocks.  In order for me to trade American stocks, I need to convert my Canadian dollars to US dollar.  I have done so in the past where it was on par and I've made money on the exchange if I were to switch back to Canadian dollars now.  The exchange sucks these days.  I do not want to lose out on foreign exchange fee, it's like buying American stocks for a premium. 

How to make USD dollars?  

I sell USD option premiums using my margin account.  When I sell a naked CALL or naked PUT option, I receive $USD in my cash balance on the day of my trade.  

Short Naked  CALL/PUT

Initial100%* option market value + maximum (((30%* (underlying market value) - out of the money amount), 10%* strike price, $250* number of contracts). Short sale proceeds are applied to cash. 30% above is 15% for broad based index options.
MaintenanceSame as Initial.
Of course, there are many different options strategies to lower your margin use through credit spreads.  I am usually an option seller to collect premiums from the securities I write.

Wednesday, May 10, 2017

Trades for May 10, 2017

Earning Release Gamble: $NVDA opened a risk reversal combo
+1 May12 114 CALL
-1 May12 94 PUT
Paid debit of 0.07

This morning, I woke up to the cry of my baby.  It was 6:45am.  The market is up and running for the past 15 minutes.  I quickly checked my $NVDA gamble play on my phone.  To my relief, $NVDA was trading above $114.  However, time is of the essence in options.  My call expires this coming Friday, May 12th.  I had thought I opened my combo risk reversal for May 19th, but that wasn't the case.  When my short put and long call got filled, the price execution was not what I had expected either.  It was for $2.47 (short put) -$2.54 (long call).  Essentially, I thought the premiums on the options were going for around $1 at the time I placed my order.

Anyways, my short put is now worthless so I get to keep my $247 ($2.47x100), no action is required.  With the long call, I can not let it go below $2.61 or else, I'd start losing money on the trade.  I was watching $NVDA fluctuating between $115-117 in the early morning hours.  I tried to close my call for $4.50, soon after, it kept on dropping to $3.00.  So I panicked and re-adjusted my price for $3.50 and it got filled shortly after.  Ended up making $96 on the call.

If I had been patient and waited to the end of the day, the $114 call for May12 would have closed at $7.47 as $NVDA closed upwards @ $121.29 per share.  I could have made $493 on the call instead!!  My problem is I am always too quick to take profits and too slow to cut losses.  I really need to re-evaluate the way I handle trades.

So how much did I make for my $7 gamble overall?  I made $343 profit in a day less $3.30 in commission.  

In hindsight, the odds on my gamble were against me.  10% jump in a day is rare for any stock.  

Scenario#1 - $NVDA beats, but doesn't jump above $114 CALL strike.  My call premiums would decay rapidly and become worthless if $NVDA trades below $114 but above $94 by May12.  I would lose my $7 gamble!

Scenario#2 - $NVDA doesn't beat, traders are punishing the stock by bringing it down below $94 PUT strike.  My PUT premiums would increase in value and wipe out all the credit I have received then I would start losing money depending on the difference in the price of the share and strike price by May12.  
There are three ways to handle this scenario#2:
1.  Buy to close to the PUT for a loss
2.  Get assignment of 100 shares @ $94.  Average cost $9153 ($94-2.47x100)
3.  Avoid assignment, roll out your put:  buy to close, then sell to open to a later date with the same strike to get a net credit in hopes that $NVDA will recover and trade above $94 thus not risking $9400 of your own money in the stock.

Another trade I made today is:
Sell to open $MDLZ
-1 June9 42.5 PUT
Received credit of 0.47
I have sold puts on $MDLZ many times, I have never been assigned.  I regret not buying the stock in the mid $20s when I initially laid eyes on them.  

Tuesday, May 9, 2017

Trades for May 9, 2017

$SBUX shares got called away this morning at $57.5 strike ($SBUX closed at $60.98 and ex-dividend today).  I was previously assigned 100 share @ $55.5.  I made 3.6% on this trade.  

Earning Release Gamble: $NVDA opened a risk reversal combo
+1 May12 114 CALL
-1 May12 94 PUT
Paid debit of 0.07

Set limit order for $CBRL @ $165.  Got filled today.  I made 2.5% on this trade.  

Buy to close $LVS 
+1 May19 56.5 PUT
Received credit of 0.60 less debit of 0.29.  I made 51.6% on this trade.

Monday, May 8, 2017

Trades for May 8, 2017

$AMZN Bear Call Spread
-10 May12 970 CALL
+10 May12 975 CALL
Received credit $220. 
*Quick trade, 4 days to expiry.  Do not want $AMZN over $970.  $AMZN closed @ $949.04.  I'm already down $155 on this trade at day's end.  I will have to monitor this closely and cut my losses if $AMZN spikes upwards.

$BMY Covered Call
-1 May12 56 CALL
Received credit $28.  
*Got assigned at $55 on Sept 30, 2016.  Cost basis is $53.30 after selling puts/covered calls previously.  Looking to exit to lower margin use.

$GILD Covered Call
-1 May19 68 CALL
Received credit $48.  
*Got assigned at $70 on March 17th.  Cost basis is $67.89 after selling puts/covered calls previously.  Looking to exit to lower margin use.

$FB Bull Put Spread 
-10 May12 148 PUT
+10 May12 145 PUT
Received credit $220. 
*Quick trade, 4 days to expiry.  Do not want $FB under $148.  $FB closed @ $151.06.  I'm up $65 on this trade at day's end.

$V Bull Put Spread
-10 May19 90 PUT
+10 May19 87.5 PUT
Received credit $220.
 *11 days to expiry.  Do not want $V under $90.  $V closed @ $91.92.  I'm down $18 on this trade at day's end.

Friday, May 5, 2017

Expiring Options for May 5, 2017

OptionAccounts (Position)
AAPL 05MAY2017 135 PUT(2)
AAPL 05MAY2017 140 PUT(-2)
GILD 05MAY2017 72 CALL(-1)

My options expired worthless.  

$AAPL traded well above $140 per share after their earning report.  I chickened out and cancelled my 3x2 other contracts last Friday when they did not fill.  I left off $210 from that trade, but I collected $146 in premiums minus $5.14 in commission.

$GILD traded well below $72 after their earning miss.  I was hoping to get rid of my shares, but $GILD lives another day in my portfolio.  I collected $42 in premium minus $1.10 in commission.

The commission per contract were higher than usual.  I can never tell... it all depends on the route of the bid/ask.