Report covering options expiry in one portfolio. I will not report the other ones - story in those is not as extreme.
Portfolio News
Uranium
Belgium agrees to shut down its 7 aged nuclear reactors by 2025 with decommissioning to be completed by 2045. This is not good news for uranium demand and prices in the short term. The Belgian government have said they will exploit future technologies, probably small reactors (SMR's), amongst other things.
Bought
A bunch of naked puts went to assignment - some were income trades and some were part of call spread risk reversals - I will write about a few only.
As I reflect on each of these, I was able to buy in at prices I was happy with ad all the themes fit with a longer view, especially on alternate energy.
Electricité de France S.A. (EDF.PA): French Utility. Assigned on naked put at 20% premium to €9.93 closing price. Income trades on EDF have been very profitable - covering capital losses on the stock 5 times over.
Cameco Corporation (CCJ): Uranium. 6.4% premium to $21.15 closing price - income trade. Call spread discussed below
The Walt Disney Company (DIS): US Media. 7.6% premium to $148.76 closing price - income trade
iShares MSCI Emerging Markets ETF (EEM): Emerging Markets Index. 3.8% premium to $48.16 closing price. Breakeven is $46.32
Hecla Mining Company (HL): Silver Mining. 10% premium to $5.00 closing price - income trade
JinkoSolar Holding Co (JKS): Solar Power. 8% premium to $46.29 closing price - income trade
Centrus Corp (LEU): Uranium. 3.5% premium to $48.29 closing price - income trade.
Maxeon Solar Technologies, Ltd (MAXN): Solar Power. 12% premium to $15.61 closing price - income trade
Solid Power was DCRC (SLDP): Battery Technology. 9.2% premium to $9.16 closing price - income trade
Sunpower Corporation (SPWR): Solar Power. 26% premium to $21.44 closing price - income trade. Call spread discussed below.
Stem Inc (STEM): Battery Technology. 6.4% premium to S18.80 closing price - income trade.
Skyworks Solutions, Inc (SWKS): US Software. 2.2% premium to $151.70 closing price - income trade.
United States Natural Gas (UNG): Natural Gas. 12% blended premium to $12.04 closing price. This was two trades - one was part of a 17/20/14 call spread risk reversal. The trade was cash positive which brings breakeven on this pair down to $13.31.
Victoria's Secret & Co (VSCO): Intimate Apparel. 0.9% premium to $49.53 closing price - income trade.
Sold
UBS Group (UBSG.SW): Swiss Bank. With price closing at SFr16.15 had a 14/14.5 call spread expire in-the-money. This spread was a bit messy as the bought call was expensive and not bought at the same time as the sold call. Net of the trade was a small loss - but I can book a profit as I can match with stock bought earlier at a lower price and hold out longer for this tranche to go to profit.
Casino Guichard-Perrachon SA (CO.PA). French Supermarket. Assigned on a covered call for 15% blended loss since May/August 2021.
Unicredito Italiano (UCG.MI): Italian Bank. Assigned on a covered call for 26% blended profit since December 2019/July/November 2020/March 2021. Averaging down helped here a lot.
Income Trades
Expiring income trades made up of 43 covered calls (UK 2 US 28 Europe 13) and 26 naked puts (US 22 Europe 4). 2 stocks assigned on covered calls and 12 on naked puts.
Expiring Options
Applied Materials, Inc (AMAT): US Semiconductors. With price closing at $146.15, 130/145/115 call spread risk reversal expired in-the-money for a 837% profit since October 2021. The call spread was partly funded by the sold put. Trade based on idea from Action Alerts Plus - see trade rationale in TIB565
Chart shows the trade did exactly what I wanted - head back to the top of the trading range and trade well above the sold put (115)
iShares Biotechnology ETF (IBB): Biotechnology. Sold put (140) of a January 2022 155/175/140 call spread risk reversal expired out-the-money. Quick update of the chart shows what happens when one is not paying attention
Price has traded past the sold call (175) level twice and has now given all the gains away. As the trade was fully funded by the sold put, the call spread is now a free trade. Somehow, I do not think there is enough time for the trade to win (see TIB535 for the trade rationale)
SunPower Corporation (SPWR): Solar Power. Sold put (16) of a January 2022 30/45/16 call spread risk reversal expired out-the-money.
Quick update of the chart shows that the euphoric post-election days for alternate energy have not come back and will not come back for this trade to win. As the trade was fully funded by the sold put, the call spread is now a free trade.
Cameco Corporation (CCJ): Uranium. Sold put (18) of a January 2022 22/27/18 call spread risk reversal expired out-the-money. As the trade was cash neutral, the remaining call spread is a free trade. In this portfolio, I am also holding a January 2023 22/30 bull call spread.
The chart suggests that selling a put below the last reversals would lever profit potential up nicely (say 18 or even 20).
European LEAP Trades
Europe markets offer very long expiry opportunities in its options markets. There were a bunch of expiries mostly in European Financials. I must say it was hard to predict in 2017, when most of these trades were set up, that there would be a prolonged spell of negative interest rates and then a pandemic. Here is the list of stocks expiring - some of the numbers are not pretty.
Credit Suisse Group AG (CSGN.SW): Swiss Bank. Loss making SFr3376
UBS Group AG (UBSG.SW): Swiss Bank. Loss making SFr3179
Aegon N.V. (AGN.AS): Dutch/US Insurance. Loss making €2779
Crédit Agricole S.A. (ACA.PA): French Bank. Loss making €1033
Commerzbank AG (CBK.DE): German Bank. Profitable €8285 - 94% from income trades.
Deutsche Bank AG (DBK.DE): German Bank. Loss making €1489 despite 2090 profits from income trades
ING Groep N.V. (INGA.AS): Dutch Bank. Loss making €17
Royal Dutch Shell plc (RDSA.AS): Europe Oil. Profitable €4270 - no income trades
You might ask why I share the loss numbers - it helps me to learn. It is better than hiding them.
I remain invested in stock in all of these stocks - some of those losses will reduce with income trades and capital growth. Commerzbank is a good example - it is the worst performing profit-wise of all these companies yet I have traded it profitably with focused income trades.
What is the lesson to be drawn? One of my fellow students used to apply a rigorous rule to shut down options contracts when they lost 50% of their value. My mentor always talked about letting options run to expiry as one loser could go from minus 50 percent to plus 300 percent = two schools of thought. The lesson in this case is about choosing to exit when the rules of the game change. Negative interest rates was just such a rule change. The collapse of oil prices was similar though they did bounce well enough after the pandemic break.
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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December 17, 2021