Stock Investment » AFL

Stocks Investment :Sold New AFL Naked Puts

admin — Thu, 13 Oct 2011 11:56:55 +0000

AFLAC, Inc ($AFL) has been on a nice run since it bottomed out recently. Sadly, not far from the bottom I sold covered calls at the strike for November only to see AFL run up past and send these covered calls in the money. I thought about buying them back, but decided to [...]

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AFLAC, Inc ($AFL) has been on a nice run since it bottomed out recently. Sadly, not far from the bottom I sold covered calls at the strike for November only to see AFL run up past and send these covered calls in the money. I thought about buying them back, but decided to go another route today. While AFL was trading at .05 I sold two AFL November naked puts for .60 each and received 9.31 after commissions.

With so much volatility in the markets lately there’s no telling where AFL is going. I think it’s a good company though and wouldn’t mind owning more at a cost around .41. If my current 200 shares get called away, then that will mean my new naked puts were not assigned and I’ll move on to something new.

The best part about volatility being so high lately is that selling new options can be very profitable when they work out. The risk might be perceived as higher, but it might not really be since stocks are already off their highs and the upside potential might be greater than the downside risk from here. Since AFL has bounced so much recently, the volatility is very high. On this particular put option the implied volatility is listed at 57+%. The risk isn’t small in the short term, but the company is still strong and pays a good dividend (3.08%). Due to the high implied volatility, I stand to make 4.6% if the put finishes out of the money. That comes out to better than 42% annualized. Those are the kinds or risks I don’t mind taking, even in a choppy market. If assigned, my average cost per share will drop substantially since I bought my first 200 shares at .00.

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Stock Investments :Options Expiration – December 2010

admin — Sat, 25 Dec 2010 11:59:16 +0000

I had a mixed options expiration for December with two of my options expiring while the underlying stock was trading above the strike and the other two finished below the strike. Here are the details:

MDY December 145 naked put – This one finished far out of the money and

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I had a mixed options expiration for December with two of my options expiring while the underlying stock was trading above the strike and the other two finished below the strike. Here are the details:

Along with the four options I had expiring today I had a little surprise hit too. A few days ago I entered a limit order to close my AFL naked put if its value dropped some more. This morning while AFL was trading at .70 it hit and I bought to close one AFL January 50 naked put at $content.30 and paid .01 with commissions. That gave me a realized gain of 1.98 in half the time I originally planned. I didn’t see much benefit in waiting another five weeks to have an additional .00 in profit after the majority of the premium had already melted away. I might sell a new naked put on AFL on Monday once I see what the February options look like, but I’m not sure I want to chase it yet. It might be a better idea to wait for a small dip before jumping back in.

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Stock Investments :Options Expiration – March 2010

admin — Tue, 06 Apr 2010 13:43:23 +0000

After what started off shaky for some of these positions ended up being a boring finish for March options expiration and that’s what I like. It’s nice having all of my positions finish out of the money with no option assignments. It gives me the freedom to reassess

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After what started off shaky for some of these positions ended up being a boring finish for March options expiration and that’s what I like. It’s nice having all of my positions finish out of the money with no option assignments. It gives me the freedom to reassess what I should be holding and either get back in to some solid positions or wait for them to come back down from their little rallies.

This is what I had going into today:

Here is how each underlying stock finished by the end of the day:

For the most part, these underlying stocks (and I guess the entire market) have had a crazy run so far for March. I am going to have to give some serious thought to what I should do next. I’m pretty sure I’ll open another position on SSO close to at the money, but probably do it like I did for this expiry by starting with a small position and then adding to it if we get another dip. I want to be sure I have exposure to the upside, but at the same time want to be sure I have some cash ready if we fall another 5-7% again. I still think we’re somewhat safe from a 20+% correction and could also use a small dip to keep this bull market in check.

As a side note, AXA finished today at .35. I left a lot of money on the table by closing this early when it dipped. AXA was trading at .35 at the time I closed the position last month. That’s 0 I could have saved by waiting until today to close my naked puts. The rest of my positions made up for it to give me a profitable expiration, but I recognize I could’ve done better. At the same time, I did replace my AXA position with other options that are doing well, so it’s not exactly an 0 mistake when you consider the replacement positions. Still, I made a mistake by buying it back earlier than I should have.

I’m still easing my way into heavier exposure and today just opened the doors to get back into an options selling spree for any stocks I think could be worth a try. I took in some good premiums this week and just need to get back in the habit of doing that every week so that when I take a loss I still have the profit growth to reach my end of the year goal.

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