Options Expiration – December 2016

Today was the ex-dividend date for MDY and someone decided to assign my shares a day early so they could take advantage of the dividend. After closing at $104.69 yesterday, my one MDY December $290 covered call was assigned and I sold my 100 shares of MDY for $290.00 while I took a full profit ($579.75) on the call option.

I missed out on the $1.165 dividend, but was able to take the profit on the shares and the option in 2016, a year I filled up with realized losses thanks to TLT. My biggest mistake was not failing to roll the covered call early and getting the dividend. The biggest mistake I made was selling a covered call as early as I did, in the middle of a post-election rally. I can console myself knowing that I was patient enough not to sell earlier, but leaving money on the table is never fun. When I add up all the premiums I received since buying MDY, I ended up finishing with a $2,599.24 profit on the series of trades. That’s consoling too.

My other December option I had coming into today was on IWM. I’m long 100 shares of IWM and have one IWM December $131 covered call that will be assigned and I’ll be forced to sell 100 shares of IWM at $131, while IWM is trading at $136.45 while I write this mid-afternoon. Including the earlier options I sold on IWM, I’ll end the series of trades with a profit of $2,003.16. As with my MDY covered call, I jumped the gun on this one too.

I sold a new MDY put a couple of days ago when I was certain my covered call would be assigned. I should’ve sold my new IWM put yesterday, but didn’t make time for trading my own account. I did get to it this morning. While IWM was trading at $136.63, nearly a dollar off its high of the day, I sold one IWM February $132 naked put for $2.60 and received $259.32 after paying $0.68 in commission.

This trade was a bit more conservative than I probably should’ve been. I have a 5.29% cushion before taking any loss. I only have a 2.0% gain potential or 11.33% annualized from the 9.2 weeks remaining before expiration. I guess my MDY naked put from Wednesday was my slightly riskier trade, so this one balanced my exposure some.

I’m not fully invested yet, but don’t want to take many chances right now with our divorce right around the corner. I feel like my account is waiting for the clarity post-divorce as the market did post-election. It’s more cautious┬áthan it should be, just in case something goes wrong. I’m also starting to wonder if the stocks have gotten a little ahead of themselves. Maybe we’ll see a “sell on the news” reaction after the inauguration or maybe traders are waiting for the new year to take profits. Even if I’m not fully invested, I have some skin in the game and won’t miss out completely if stocks push on for additional gains. If stocks falter, I have about 20% of my account ready to buy in cheaper.

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