Two days after I posted my plans earlier this week for my expiring options Aflac (AFL) got spanked and lost 6% after issuing poor guidance. This morning I took an option assignment a day early on my AFL May $55 put and now have 100 shares in my account with no AFL options on either side. I was planning to sell a strangle on my 100 shares, but now I’m debating what I’m going to do. I could dump the shares for a loss of about $250 (when including the premiums I’ve received) or I could try to work it out with new options. It all comes down to what I think AFL will do over the next few months. It held support yesterday and is still above its low for the week, but drifting lower as I write this.
I’m going to wait until Monday to see what the July contract premiums look like. I could still end up going with an August expiration though. Also, I’m not sure if I’ll add another naked put or just stick with the 100 shares I have and only add a covered call. The covered call will probably come in at the $50 strike if I go with the July expiration and depending on how AFL opens on Monday I might go as high as $52.50. Any put I add won’t be above $50 for sure. I don’t know if I’ll even go lower than that. If the put and call are at the same strike it’s called a straddle and I’m pretty much guaranteed to have one of them assigned. Owning 200 shares of AFL wouldn’t be such a bad thing for the long term. Its dividend yield is 2.38% and although they aren’t giving guidance for much growth, if any, they are still bringing in a nice pile of cash as it is.
I made a mistake on Tuesday when reporting my Qualcomm (QCOM) position. I said I had a May $57.50 covered call about to expire worthless. I actually have a May $55 covered call that’s in the money. Unless something ridiculous happens this afternoon I’ll be selling 100 shares for a $2.50 loss per share, but when I include the three legs of premiums I’ve received I’ll end the series of trades with a profit of $362.61 or 6.76%. I’ll let QCOM slip away with me for now and will most likely come back to it after 30 days when the wash rule isn’t keeping me out any longer.
Boeing (BA) far exceeded my expectations since I sold the May $70 naked put. I’ll be back in on BA again before long I think. I’d like to see it dip again before getting in and will probably enter a limit order for a July $75 put once those contracts are posted on Monday.
With today’s option expiration I’ve freed up more cash and margin again and am not even fully invested right now. I’m still bullish for the remainder of the year and hope to see some lower prices in the upcoming weeks to allow me to get in at lower prices again. If we stay in more of a sideways pattern I might have to go with another index put in addition to my upcoming new puts on BA and AFL.
I’ll be taking a couple of assignments today as well:
ENTR being called away at $7.50 for a lost on the series of trades of about $220 – not too bad considering it’d be $450 without the option premiums received
AEM being assigned via $65 Puts for a basis of $63.90 – I’ve already sold June $62.50 Covered Calls at $2.20 which will give me a measly $80 profit if called away or a basis of $61.70 otherwise. Small profit potential but good risk reduction.
Another 200 CSCO being assigned via $17 Puts. I’ll then hold 400 CSCO at a basis of $16.60. I’ve already sold 4 June 17 Covered Calls and am planning on selling an additional 2 Naked Puts.
200 MSFT being assigned via $25 Puts for a basis of $24.50. I’ll happily sell additional Puts, Calls and collect dividends here.
My first plan of action next week is to sell IWM Puts but that could change come Monday.
Did you end up selling IWM puts today? Aside from my AFL trade I made this morning (5/23) I’m going to sit tight for now. At least DSX is coming back up for us. I still expect to be assigned shares on it, but I’m cool with that still.
Yeah, I decided to go for a weekly Option. I sold a single $81 Put for 05/27 expiry at $0.86. I only intend to have a single stock where I sell the weekly Puts in and, for now, this will be it. If assigned, I’ll sell an ATM Call and OTM Put (with 200 shares being my max position).
I might consider weekly Call Options against my CSCO and/or MSFT as well but, for now, IWM Puts will be enough.
I also sold another couple of June CSCO Naked Puts and 600 shares will be my max position there. With 600 shares, another option will be to sell 3 weekly Calls and 3 monthly Calls against the position. For now, I’ve already got the 4 June Covered Calls so we’ll see what happens there.