NYSE Euronext (NYX) covered calls vs naked puts

I own 100 shares of NYX in both my IRA and my taxable brokerage account. I sold an August 80 (NYXHP) covered call in each account on NYX this morning as the price of the stock continues to slide. 80 has been a strong line of support and I thought NYX might bounce off of it this morning. It didn’t immediately and I decided to write options ATM. Maybe I’m asking too much out of NYX, but I keep thinking it has something to bring it up. I’m facing reality and cutting my losses. I almost sold ITM and I now have two months to wait and see if that is what I should have done.

This is an interesting look on my profit/loss when viewing naked puts vs covered calls. I’ve sold covered calls in both accounts, but was able to open my position on NYX with a naked put in my brokerage account. That gives that account the profit lead. Another downside to the IRA side comes from my mistake of trying to leg into the position in my IRA. I took a quick loss before I wrote my first covered call.

Brokerage Account

Sold 1 January 90 put – NYXAR, 12/5/06 +$419.24
Sold 1 February 90 put – NYXNT, 1/9/07 +$499.24
Bought 100 shares of NYX when NYXNT was assigned, 2/20/07 ($10,029.99)
Sold 1 April 95 call – NYXDS, 2/20 +$399.24
Sold 1 June 90 call – NYXFR, 4/23/07 +$499.25
Sold 1 August 80 call - NYXHP, 6/18/07 +$399.25

Cost per share minus premiums received = 78.14

——————-

IRA Account

Bought 50 shares of NYX - 3/29/07 ($4,854.99)
Bought 50 shares of NYX - 4/24/07 ($4,299.99)
Sold 1 June 90 call - NYXFR – 4/24/07 +$349.25
Sold 1 August 80 call - NYXHP, 4/18/07 +$409.25

Cost per share minus premiums received = $83.96

On another note, all of my options except for AAPL finished OTM this month and with my NYX covered call I’m sitting on almost $50,000 in cash now. I’ve been a little busier at work lately and haven’t identified which puts I want to sell next, but will try to put more effort towards it this week. I didn’t even get a chance to read much of my Barron’s this weekend since it was Father’s Day and both my dad and my father-in-law live in town. We knocked out my wife’s dad first with a day at our neighborhood pool on Saturday. On Sunday, my parents brought us a house warming present of a new killer gas grill. We grilled filet mignon and ate like kings. That was my first time grilling filets and have to say I did it right. If the market stays bullish for a while I’m going to have to make that part of my regular diet. ha ha

Technorati Tags: naked puts, investing, stocks, options, covered calls, options strategies, trade, IRA

3 Comments

Comment by Tommy Chieng

Great blog. Will certainly come back for more to understand more on stock investments.
Comment by Bben

Your blog reads well (thx), but I think it will be easier to read if instead of the OPRA symbols for the options, you will use the actual month and strike. For example: instead of
“Sold 1 call – NYXHP, 4/18/07 +$409.25″ write: Sold 1 August 80 call, 4/18/07 +$409.25″
Thanks,
~B
Comment by The Trader

Thanks Bben, you make a good point. I usually write out the month and strike, but for simplicity (for me) I used the OPRA symbols since that’s how I had it documented in my Excel spreadsheet. I’ll make the edits above.