I had another pretty good month with my options going my way for the most part. I continue to reclaim losses from last year and am easing my account balance a little higher with each month’s options expiration. Here’s how it broke down for me with today’s option expiration:
- DIA – I closed my DIA vertical call spread this morning for a loss. DIA closed for the day at $82.78 and I closed my position early at $0.80, which means I was on the money for where I thought it could go down to today, but noticed that it did go much lower earlier and I could’ve gotten out closer to break even if I had been perfect.
- GLD – Long May 85 puts and short May 88 puts – GLD finished at $91.55, so it was a good trade
- XLB – Long May 19 puts and short May 22 puts – XLB closed at $25.83 for the day making this a good trade for me.
- FWLT – Short May 19 naked puts – FWLT closed at $23.13 for the day making this a good trade for me.
- JOYG – Long shares and short May 25 calls – JOYG closed at $28.19 which left my covered calls in the money. If I hadn’t sold the calls I’d have more money, so this was not a good trade for me by about $1.50 per contract or $450 total.
- USO – Short May 26 naked puts – USO closed at $31.30 for the day which made this a good trade for me.
I’m pretty excited about having most of these options finish in my favor, but recognize that I could’ve done better if I had sold higher strikes on all of them. I stayed gun shy expecting the downturn that started this week to have started sooner and be fiercer, but I go into next week with very little at risk to the downside. Of course that means that I also have very little exposure to upside movement and that’s where my risk is right now. For June I have NDAQ June 17.50 puts that are out of the money still and a SLB 45/55 strangle with both sides out of the money right now. I might have another run at some of the same stocks above that finished out of the money, but that’ll be part a slow process as I still want to ease into too much downside exposure.
You made some very good trades for the month. What kind of percentage gains do you make on these kind of option trades?
Each one varies, but I aim for no less than 20% annualized on each one based on premium/cash I’d need to buy if assigned. Since I’m not fully invested right now that doesn’t mean I’ll make that much overall, especially since I mix some losses in with it, but I also make 45% annualized on others. Anything more than that and I start to second guess myself that I might be taking on too much risk.