This is catch up report for September options expiry action in my other two portfolios
Portfolio News
Natural Gas Natural gas prices in US (and now in Europe) have been on a tear.
I have had a few trades in place based on ETF Trade Signals I received from my broker - good to be on the bandwagon somehow. I have to say it was more off chance than by design.
Bought
American Eagle Outfitters, Inc (AEO): US Consumer. Assigned on naked put in two tranches at 6.7% average premium to $26.70 closing price. Price has since moved within 2%. Breakeven is $27.73 average taking into account naked put premiums this month only. Price closed September 27 at $27.81 which brings this tranche into profit. This proves the design idea for using naked puts for driving income - apply it to stocks you would be happy to own at a price lower than the current price.
Delta Air Lines, Inc (DAL): US Airline. Assigned on sold put leg of call spread risk reversal at 14.7% premium to $40.11 closing price. Breakeven on the sold put alone would be $43.15. With September 27 close of $43.78, this tranche is also profitable. However, this is only a valid way to look at the trade if the call spread goes in-the-money. It had a net premium of $2.44 - that brings the breakeven on the stock tranche to a more aggressive $45.60 = only 4.2% away. The first covered call has grabbed back 0.67% points of that
See TIB560 for the discussion on the trade setup duplicated in my pension portfolio
Sold
United States Natural Gas (UNG): Natural Gas. With price closing at $17.65, 15/17/13 call spread risk reversal expired in-the-money offering the maximum profit of 636% over spread costs since setting up the spread in August 2021. In another portfolio, I had the same trade set up with similar profile. Also assigned on a covered call for 17.8% profit since August 2021.
The chart shows how price has raced through. My expectations in setting up the trade was for the blue arrow price scenario to play out. I was not expecting to do it twice. The trade management lesson here is to look at rolling out and up when prices moves this hard.
Global X Uranium ETF (URA): Uranium. Assigned on covered call at two different strike prices. First tranche as the high strike applied against longest standing holdings produced a 29% blended loss since July/August 2013 and January 2017. The latter tranche was sold at a profit. This first tranche was bought following breakout analysis and happened before Fukushima. The second tranche was assigned at a lower strike for 18% profit since February 2017 - too bad I did not average down more like I did in my pension portfolio.
Wells Fargo & Company (WFC): US Bank. Assigned on covered call for 3.4% profit since September 2021 - two weeks worth.
Shorts
Utilities Select Sector SPDR ETF (XLU): US Utilities. Naked put on a short position assigned yielding a 18% loss since May 2020. This short position has been held since June 2018 predicated on rising interest rates - still waiting. Since I started writing naked puts in April 2020 against the short, the income trades have almost covered the last capital loss. I might well set this up again as I am convinced rates will rise hard before too long. I do have a municipal bond long position which covered dividends paid out on this short.
Invesco QQQ Trust (QQQ): Nasdaq Index. With price closing at $373.83, 347/343 ratio put spread expired worthless. I did adjust this spread by buying back the sold leg and replacing with one closer in the money - that yielded a net 3% profit = not bad for a hedging trade and after recovering a trading error at setup.
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. With price closing at $149.17, 147/144.5 ratio put spread expired worthless. As this was a ratio spread, the trade was marginally profitable.
Expiring Options
Hecla Mining (HL): Silver Mining. With price closing at $5.58, two tranches of call spread risk reversals expired worthless in one portfolio. These trades were set up in February and March 2021 in the light of the silver squeeze driven by the WallStreetBets crowd. As these were cash neutral the loss was minimal - really only trading cost size = not a bad way to play this game.
The chart shows one of the trades. Trade starts with the big spike driven by WallStreetBets noise. Stock did trade just in-the-money for a few days and then dropped back. As the trade was cash neutral, I was not interested in closing for a small gain then. I was also totally happy to buy at $5 if I had to - price never got that low. i have a hunch that this might be the level to buy more stock given the way yields are rising.
Income Trades
It was a strong income month in this portfolio. 48 covered calls (US 35, Europe 11, Canada 2) and 17 naked puts (US 16, Europe 1) written with 4 naked puts assigned (all US) and 4 covered calls assigned (US 3, Europe 1)
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
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September 17, 2021