Options Expiration – December 2017

Today is the last monthly options expiration day of the year and I had three options expire worthless, giving me a full profit on each of them. My ADI December $80 naked put gave me a realized gain of $266.70. My AAPL December $155 naked put gave me a realized gain of $516.89. I sold replacements for both of these contracts, but haven’t replaced my MDY put yet. My MDY December $320 naked put gave me a realized gain of $929.74. That’s a total of $1,713.33 for the month and I could’ve made more if I had sold any of these at higher strikes. As I write this at 1:25 pm, ADI, is trading at $86.92, AAPL is trading at $173.40, and MDY is trading at $343.51. I left a lot of money on the table by not pushing for more, but the risks seemed worthwhile at the time. If nothing else, it would’ve been good to roll these contracts higher sooner. ADI is the only one I really thought about rolling early, but just didn’t make the time for it.

These are the two new trades I made. While ADI was trading at $86.96, I sold one ADI March $85 naked put for $3.00 and received $299.75 after paying $0.25 in commission. My cost per share would be $82.00 if this option is assigned. If it stays above my $85 strike, I’ll have a 3.66% return, 14.51% annualized. ADI can fall 5.7% before I lose anything. While AAPL was trading at $173.49, I sold one AAPL February $165 naked put for $3.35 and received $334.32 after paying $0.38 in commission. My cost per share if assigned would be $161.70 and if not assigned, I’ll make 2.04%, 11.65% annualized while I have a 6.8% cushion before I lose a penny.

I see support before my potential losses on both of these trades and think I could’ve used higher strikes, but with these potential returns, I didn’t feel I needed to take the extra risk.

I am sticking to my usual plan of rebalancing my account to $100,000 after the end of the year. That means I’ll take out roughly $7,000 (based on my balance today) and move it to another account. This is one of the reasons I didn’t sell a new MDY naked put. The other is that the MDY premiums don’t look great for tying up $34,000 in cash to back a trade. I’ll find something else, probably two other trades to get a better total return or at least that’s the plan.

My trade video on YouTube can be found here.

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