Stock Investment » SPY

Stock Investment :Options Expiration – November 2010

admin — Fri, 26 Nov 2010 02:58:03 +0000

I had a good options expiration this November as most of my positions went my way. Here’s the breakdown of how everything finished for me.

SPY – 112 Straddle (sold 1 put and 1 call at 112) – My put finished well out of the money and which means my covered call

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I had a good options expiration this November as most of my positions went my way. Here’s the breakdown of how everything finished for me.

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Stock Market Investment :Options Expiration – September 2010

admin — Wed, 22 Sep 2010 03:10:49 +0000

Today’s options expiration finished quietly for me as I only changed one position in my account. The real action starts next week when November contracts are posted for all of my positions that don’t have them yet. For the most part it went the way I described it

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Today’s options expiration finished quietly for me as I only changed one position in my account. The real action starts next week when November contracts are posted for all of my positions that don’t have them yet. For the most part it went the way I described it earlier in this week in my lead-up summary. I changed my mind on SPY though. I’m not convinced yet that SPY has much more strength to go much, if any, higher. While SPY was trading at 112.45 I bought to close my one SPY September 112 covered call for $content.67 and paid .01 with commissions. At the same time I sold to open one SPY November 12 covered call at .22 and received 0.99 after commissions.

I had a much lower strike naked put (September 101) expire worthless and was thinking about selling a new one around 110 to make this a strangle, but decided I’d rather see how SPY reacts next week before I add more potential margin to my account. I’ll really just have to regroup next week when the dust of today settles. If you noticed above, I didn’t even sell my covered call out of the money. If it’s called away in November I’ll lose money on the shares themselves, but am more concerned about having more money by then than I have right now. Selling an in the money covered call increases my possibility of that. Selling a covered call in the money by 45 cents leaves me with about 6 more on the ,200 left to back it. That’s about a 3.35% gain or 20% annualized. I can’t be upset with 20% annualized gains on in the money calls. I might have been more aggressive if I thought the markets had more left to gain, but I just don’t see it yet. If I change my mind I’ll be quick to sell a new naked call. If we see SPY solidly over 3 for a few days, as if it can stay above it, I could see me selling a naked put at 2 to make my position a straddle, a call and a put short at the same strike.

My cost per share for SPY, including all the premiums I’ve received during this series of trades is down to 0.40. I’ll add a new naked put once it drops or gains some and will reduce my cost even further, but if my new naked put results in me buying shares it’ll bring my average cost higher. That’ll just give me more shares to sell covered calls on then.

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Stock Market Investment :Position Updates – SPY and EEM

admin — Wed, 26 May 2010 09:15:33 +0000

As I mentioned a few days ago in my May options expiration post that I planned to sell covered calls on a couple of stocks that were assigned to me. I started with SPY and targeted an options strangle (sell a put and sell a call at different strikes on the same underlying stock) and my [...]

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As I mentioned a few days ago in my May options expiration post that I planned to sell covered calls on a couple of stocks that were assigned to me. I started with SPY and targeted an options strangle (sell a put and sell a call at different strikes on the same underlying stock) and my limit order didn’t hit. I wanted to sell a July 104 put and July 112 call for a net credit of .10. I actually could’ve gotten .10 when I first started watching it, but waited with the expectation that it was going to drift higher. When it started going the other way I entered my limit at .10 only to see it melt away from me as volatility drained from the markets. By lunch time the same order was trading around .50-6.60. I decided to give in and lower my limit order, but then decided I wanted to remove a little more risk.

Risk in this situation included downside and upside risk. In the event of another steep selloff I thought I should lower my strike to delay an assignment too high. In the event of a rally I wanted to be a part of it for longer and raised my strike for my calls. While SPY was trading at 8.93 I sold one SPY July 101/113 strangle for a net credit of .22 and I received 9.97 after commissions. I sold the July 101 naked put for .79 and the July 113 covered call for .43. I picked the 101 strike because I don’t see this correction going lower than 20% from SPY’s recent highs. (That would be just under for SPY.) I chose the 113 call strike because I wanted more room for the 100 shares I own to grow from here and if called away I wanted to have a decent profit. So far I’ve taken in .19 in premiums on SPY and if called away at 3 I’ll lose .00 on the stock shares. That will leave me with a profit of .19. I thought about aiming higher on the strike, but decided that I can be happy making back money on my other positions that are in the money now if we get a big rally. If SPY gets above 3 by July I might be worried about its staying power unless we hear some better than expected news soon.

While waiting on SPY I placed an order on EEM too. I was planning to sell a strangle on it, but then started second guessing myself, mainly because I’ve moved past the point of having enough cash to back all of my puts and have some other stocks I’m eyeing for more naked puts. I do expect to add at least one more naked put on EEM and maybe two, but just not today. While EEM was trading at .46 I sold two EEM July 39 naked puts at .32 each and received 2.57 after commissions. With my trepidation on EEM I knew I wanted to reduce my cost and basically took the highest strike for July that paid at least a 20% annualized gain if the stock stays flat. The 39 strike was the winner. The .50 range might be an area of support for EEM and if/when it gets down there and proves that I’ll probably sell the extra puts I’ve been considering.

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Stock Investment :Options Expiration – May 2010

admin — Sat, 22 May 2010 12:28:10 +0000

What started just a couple of weeks ago as an easy ride into expiration turned around on me very quickly, especially in the last few days before today’s relief. I’m still not sure what to think with where the markets are heading over the next week/month and so I started

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What started just a couple of weeks ago as an easy ride into expiration turned around on me very quickly, especially in the last few days before today’s relief. I’m still not sure what to think with where the markets are heading over the next week/month and so I started adjusting some of my positions today to remove some risk.

Based on how the underlying stocks moved after my trades today it looks like I might have picked the wrong ones to exit as soon as I did, but that’s how it works. Not every trade can be profitable and made at the right time. I’m moving on with minimal realized losses for now and live to trade another day. I’ll probably sell a few more covered calls on Monday or maybe even another naked put or two if we appear to be heading higher again.

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Stock Investment :Sold SPY Naked Puts

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

At the risk of jumping in to this lengthy March rally too late into it, I decided to add S&P 500 exposure through the ETF SPY while it was down a little this morning. My thought process went something like this – I use the S&P 500 as my main benchmark to measure against

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At the risk of jumping in to this lengthy March rally too late into it, I decided to add S&P 500 exposure through the ETF SPY while it was down a little this morning. My thought process went something like this – I use the S&P 500 as my main benchmark to measure against my personal returns, I’m underinvested currently, I wanted a very large ETF, I wanted a cushion in case we get a small pull back. SPY was an obvious choice for the underlying with these motivations. Since I’m so underinvested I decided to sell an at the money naked put with the mentality that I have cash reserves available to buy in lower if the markets dip lower than I expect. Naked puts automatically build in the cushion I was looking for. I didn’t want to push my risk level too high after so many positive days for the markets for March so I didn’t go with SSO which is my typical choice.

While SPY was trading at 7.06 I sold one SPY May 117 naked put at .00 and received 8.99 after commissions. I started with only one put, but might add one or two more over the next couple of weeks and consider it an asset allocation of 20-30% of my holdings in the S&P 500. I’m still leaning to the bullish side, but would also still like a small dip sometime soon. My feeling is that some of this rally is end of the quarter window dressing, kind of like what we saw in December. If that’s correct, we will continue to rally or at least stay flat through the middle of next week and then maybe get that dip so many of us are waiting for during the first week or two of April.

This trade gives me almost ,000 in premiums that I’ve brought in for the week. This is higher than my typical week, but it should be since this is the week after options expiration and I need to ramp up exposure quicker than in other weeks of the cycle. If I ran at this rate each week I’d be way over exposed to downside risk. If I’m still reaching for an end of the year gain of at least 15% I only need to make one more trade for the cycle. That’d be nice if I knew everything was going to go my way on each trade, but since that’s not a reality I have to sell more options to give me cushion for my mistakes. In a steady bull market overselling slightly gives an easy way to beat the indices. In a bear market it can make the losses greater. In a flat market it gives an option seller an opportunity to crush the markets’ performance, as I did in 2007.

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