June 2008 turned into another profitable month for my short options to expire. Most expired worthless and the others still gave me a profit.
These first three took some extra thought today since they did not expire worthless.
I sold three DIS June 30 covered calls (DISFF) for $2.35 in the money after taking a naked put assignment at the 32.50 strike. It expired in the money still, but not by more than 2.35, meaning I could’ve bought the calls back for a profit. DIS closed at 31.94. I will be forced to sell my 300 DIS shares at 30 although DIS is trading above where I initially bought it. I made $302.75 from the original naked puts and $692.75 from the covered calls. That’s $995.47 that I received in premiums. I’ll take a loss of around $770 on the underlying stock. That still gives me a $225.47 profit in four months on $9750. That’s a 2.3% gain, nearly 7% annualized. I have to be happy with that for my worst trade of the month.
I sold two VIP June 30 (VIQFF) covered calls for $2.50. Selling in the money covered calls ended up being a good move since VIP came down a little from where it was when I wrote the covered calls. I got in on VIP four months ago after profiting earlier on it. Not counting my original profit from the early naked puts that expired worthless, I received $408.50 from the April 35 naked puts which ended up being assigned. When I thought VIP had peaked, I sold three April 40 naked calls on VIP and received $347.74. I closed two of those calls for $31.49 and let the third expire worthless. After being assigned 200 VIP shares at $35.00, I received $488.50 from my June covered calls. I bought those calls back for $121.49 today. I’ve taken in $1,091.76 in premiums so far. VIP closed today at $30.21 – I bought my calls back too early and could’ve paid $30 less. I’ll sell new covered calls on VIP within the next few days and delay my impending loss on the stock of $1,000 plus commissions. I could’ve let it expire and have the shares called away, but think VIP will find support again and allow me to take a better profit. In situations like this I have to decide if I could use the money invested in my current shares better somewhere else. I’m not convinced I can and decided to keep VIP in play for me. I’m even considering selling some new naked puts at the 30 strike to go with my 30 strike covered calls I have planned. Doing that will guarantee one to expire worthless and could have both turn a profit.
I sold one CELG June 60 naked put (LQHRL) for $2.85. I bought it back today for $0.90 and I paid $100.74 with commissions. After receiving $274.25 when I sold the naked put two months ago, I ended up with a profit of $173.51 when I closed it today. I figured it was better to play it a little safer right now and have cash available if the 400 point loss on the Dow this week continues a little longer. This differs from my plan with VIP where I decided to keep in play for two reasons. One, I don’t own shares yet so I could get out completely with one trade. Two, I’m not as convinced with CELG’s direction. I might change my mind and sell new naked puts on it within the next few days. CELG actually finished up from its lows of the day to close at $59.58. I bought this back too soon too.
These next five were perfect. All expired worthless and I was able to keep the full profit without spending a dime to buy them back.
I sold one AAPL June 170 naked put (+APVRN) for $4.60. It’s expiring worthless, allowing me to keep 100% of the profit. AAPL was below 170 for a few days, but I stayed patient after charting it and thinking it had some life left in it. AAPL closed at 175.27 today. I’ll consider more naked puts on it again when I see the market find its footing again.
I sold three AA Jun 35 naked puts (AARG) for $1.30 each. It’s expiring worthless, allowing me to keep 100% of the profit. AA closed down $1.78 today to end at 37.34. That’s perfect for these naked puts, but I have another couple for the July 40 strike that aren’t looking as pretty now. At least I have naked calls at the July 47.50 strike too. Those look great.
I sold one MON June 110 naked put (MONRB) for $4.40. It’s expiring worthless, allowing me to keep 100% of the profit. MON closed at 139.95 today.
I sold six SFLY June 17.50 naked calls (QFYFW) for $1.07. It’s expiring worthless, allowing me to keep 100% of the profit. SFLY closed at 14.15 today, well below my strike.
I sold two FWLT June 60 naked puts (UFBRL) for $2.50. It’s expiring worthless, allowing me to keep 100% of the profit. FWLT closed at 72.90 today. I’ll consider new out of the money naked puts on it again when the market settles.
I’ll see after everything settles on Monday, but as an estimate now, I think I’m close to a realized profit of $2700-2800 today. If I can maintain an average of $2,000 per month in growth I’ll end the next 12 months with a ~25% gain. Clearly I know I’ll have some months with losses, so these months I beat $2,000 are important.