QCOM options were my only contracts left to expire today. My one QCOM $62.50 naked put will expire worthless and my two QCOM $62.50 covered calls will be assigned. This takes me out of QCOM completely for the first time in well over a year.
In March 2012, I sold a single QCOM naked put at the $67.50 strike while QCOM was trading at $66.25. A few months later, after being assigned the first 100 shares, I added a $62.50 naked put along with a covered call. I repeated this process again after my second 100-share lot was assigned at $62.50. I wasn’t assigned any more shares and continued to profit from unassigned covered calls and naked puts on QCOM up until today.
As of the close of today’s market, my 200 QCOM shares will be assigned. QCOM is trading at $67.33 as I write this, up only $1.08 from where it was when I first entered this series of trades. Including the dividends I pocketed along the way, I made a realized gain of $2,497.46 on this series of trades. I’m not taking the time to calculate my annualized gain from this position because I had so many moving parts to it that my dollar exposure would be tough to nail down. I can look at $2,497.46 and be happy knowing that if I had 200 shares of the stock when I made my initial trade, I’d be up only $461.00 ($245 from dividends). Instead of using options at each level, I could have bought 100 shares at $66.25 and another 100 shares at $62.50 and then another 100 shares at $60.00, I’d only have made $1,569, including dividends and would’ve had my cash tied up longer.
Using options was the right trade here and I’ll do it again. I still like QCOM and expect to open more exposure again on any weakness (or maybe on strength if it goes that way). Every time I’ve exited in the past six years, I’ve regretted it. QCOM finds a way to move higher most years and I’ve missed some of that when I’ve taken breaks. My next QCOM trade will probably be small and out-of-the-money to get the series started again. So far, I’ve looked at the October $65 puts and might enter a limit order good-til-cancelled (GTC) above the ask price before I shutdown my system today. Then again, with the market sliding still, I might do better to keep more cash available for other trades later in the month or quarter. The expiration of these options opened up $18,750 for me. If I don’t count my UCO position (because it looks like a low probability of being assigned in two months and I might close it sooner anyway), I’m not over-invested and have about 10% of my account not allocated to any position.