Vimpel Communications (VIP ) has been down for a while and I’ve actually been surprised that my latest naked puts had not been assigned earlier. This morning my two VIP August 30 naked puts options (VIQTF) were assigned and I bought 200 shares of VIP at $30.00 and I paid $6019.99 with commissions. A couple of days ago I wrote about selling new VIP calls, this is why I did it early. I set my limit high enough to only hit in a spike and then assumed I’d own the shares soon enough to cover the calls. Now I own the shares and those naked calls are now covered calls.
I’ve taken in a lot of premiums on VIP over the past few of months and even with the share price down more than $10 I’m still sitting around break even on the series of trades. Here are the trades I’ve made on VIP for this series. I had earlier trades that ended in full profit. I’m not counting those here since I had a chance to stay out completely.
- 2/19 Sold two April 35 naked puts VIQPG @ 2.1, +408.50
- 3/3 Sold three April 40 calls VIQDH @ 1.2, +347.75
- 3/19 Sold two April 30 naked puts VIQPF @ 1.9, +368.50
- 3/25 Bought two April 40 calls VIQDH @ 0.1, -31.49, one expired worthless
- 4/21 Bought 200 shares at 35, -7,019.99
- 4/21 Sold two June 30 covered calls VIQFF @ 2.5, +488.50
- 6/20, Bought two June 30 covered calls VIQFF @ 0.55, -121.49
- 6/23, Sold two August 30 calls VIQHF @ 2.25, +438.50
- 6/26, Sold two August 30 naked puts VIQTF @ 2.25, +438.50
- 8/11, Sold four September 25 calls VIQIE @ 2.5, +987.00
- 8/14 Bought 200 shares at 30, -6019.99
If I add all of those premiums and cost of buying the actual shares, I get $9715.71 that is my net outflow. Dividing that by the 400 shares I own now and I have a cost per share of $24.29. VIP is trading at $24.35 now (up $1.33 for the day). If my four September 25 covered calls finish in the money, I’ll end this series of trades with a profit of more than $200. That’s not much, but on a very bad stock pick, I’ll be happy with that. If VIP continues to fall, I’ll continue to write covered calls on it. Hopefully the decline slows its pace so I can get farther ahead with my profit. As I’ve said before, if I can break even (or take a small profit) on my bad picks, the good trades will put me far ahead of the indices’ returns overall.
Be very careful with this line of thinking. The profits you make on good trades will be small but consistent. It’s the black swans like NVDA that will kill your overall return. There’s very little you can do to avoid getting hit for the occasional disasters. It’s the risk you take for naked puts (vs. put spread).
Russia and Georgia can’t fight forever. I’d look at taking some additional positive delta.
I’m in for $10k on VIP now (10% of my account value), I hesitate to take on more positive delta until the perceived risk of a gov’t takeover of VIP decreases.
You may be in for $10k and having position limits is good.
That isn’t necessarily correlated with your delta. You’ve got covered calls reducing your delta. You could always add some out-of-the-money bull put spreads to add delta for small amounts of incremental risk.
Not saying you should do that as strict position limits is good. But rather pointing out the difference.
Yep, understood your point. Was trying to say I do not want more exposure than I already have, including any other option exposure. If I spend too much time on VIP my other positions will suffer a lack of attention since I have a lack of time with a full time job and family that both need attention too. I try to keep my positions more basic.