Options Expiration – August 2018

My four QQQ August $133 naked puts were the only August option contracts I had remaining by today’s expiration. They’ll expire worthless and I’ll have a realized gain of $805.54, but that doesn’t include the loss I took on the long puts I bought as part of the original QQQ ratio spread. The long puts that I closed a few weeks ago gave me a realized loss of $704.51, so my net gain is $101.03.

$101 is hardly worth bragging about, but I’m happy with it considering the ratio spread that I sold in early May was expecting a drop in the QQQ price. Instead, it went from $138.26 on May 9 to $141.61 while I write this in the late afternoon on expiration Friday. I’m happy any time I’m wrong about a stock’s direction and still make money and that’s why I invest with options. Options give me a margin of error that isn’t available with basic buy and hold stock buying or even straightforward stock trading.

After canceling the limit order I had in place earlier this week for a WMT October $80 naked put, I’m trying to decide if I should redo it. I could get a dime better than my original order, which is $0.20 less than it opened yesterday morning when I canceled it. I’m not really worried about the long-term prospects for WMT, but the recent shaky behavior from stocks makes me want to keep some dry powder available. Right now, that dry powder equals over 15% of my account or $15,626.93 in available cash that isn’t being used to back any put options.

My positions are mixed as far as their probability of profitability looks like. Here’s what I have in play still:

  • 1 IWM September $142 naked put – in the money greater than the premium I received
  • 1 MDY September $120 naked put – in the money greater than the premium I received
  • 1 ADI September $80 naked put – in the money less than the premium I received
  • 1 QQQ October $142 naked put – in the money less than the premium I received
  • 1 AAPL October $160 naked put – in the money less than the premium I received
  • 2 XLF September $24 naked puts – out of the money and currently showing a $100 paper profit

This all adds up to a decent amount of upside potential if stocks recover, but not a lot of further cushion on more weakness. My 15+% in cash covers the cushion. I want to see how the S&P 500 handles its 100-day moving average next week. Right now, the 100-day SMA is working as support, but after yesterday’s sell-off, I didn’t expect today to be too big in either direction.

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