Options Expiration – March 2010

After what started off shaky for some of these positions ended up being a boring finish for March options expiration and that’s what I like.  It’s nice having all of my positions finish out of the money with no option assignments.  It gives me the freedom to reassess what I should be holding and either get back in to some solid positions or wait for them to come back down from their little rallies.

This is what I had going into today:

Here is how each underlying stock finished by the end of the day:

• AFL - finished the day at $54.10, $4.10 above my strike after spending some time in the money just a few weeks ago.
• EEM - finished the day at $41.19, $0.19 above my strike and was my closest option to being in the money.
• KFT – finished the day at $29.63, $1.63 above my strike and I could’ve aimed at a higher strike without much concern since KFT just stayed solid the whole time I held it.
• SSO – finished the day at $41.45, $4.45 and $9.45 above my two strikes - I doubled up on SSO during a dip and it paid off.  I had plenty of room to take a bigger risk, but enjoyed having no worry over this one through expiration.
• VIA – finished the day at $33.69, $3.69 above my strike.  VIA stayed solid after an initial dip to also finish well above my strike.

For the most part, these underlying stocks (and I guess the entire market) have had a crazy run so far for March.  I am going to have to give some serious thought to what I should do next.  I’m pretty sure I’ll open another position on SSO close to at the money, but probably do it like I did for this expiry by starting with a small position and then adding to it if we get another dip.  I want to be sure I have exposure to the upside, but at the same time want to be sure I have some cash ready if we fall another 5-7% again.  I still think we’re somewhat safe from a 20+% correction and could also use a small dip to keep this bull market in check.

As a side note, AXA finished today at $21.35.  I left a lot of money on the table by closing this early when it dipped.  AXA was trading at $19.35 at the time I closed the position last month.  That’s $800 I could have saved by waiting until today to close my naked puts.  The rest of my positions made up for it to give me a profitable expiration, but I recognize I could’ve done better.  At the same time, I did replace my AXA position with other options that are doing well, so it’s not exactly an $800 mistake when you consider the replacement positions.  Still, I made a mistake by buying it back earlier than I should have. 

I’m still easing my way into heavier exposure and today just opened the doors to get back into an options selling spree for any stocks I think could be worth a try.  I took in some good premiums this week and just need to get back in the habit of doing that every week so that when I take a loss I still have the profit growth to reach my end of the year goal.