This month’s options expiration was another easy one for me. I only had one option expire today and it was not even close. UWM is trading at $78.14 while I write this, meaning my two UWM October $52 puts will expire worthless and I’ll make a full profit. I could’ve made a lot more on the trade by using a higher strike, but the trade served the purpose I needed. I wanted a safe play with a decent return. Since I didn’t set aside cash to back these puts, all gains were gravy.
I’ve made such a change in my trading approach over the past year or so that such nonevent expirations are getting more common, especially as the market continues to ascend. In most cases, I’ve learned to take the advice of readers and either close options early or roll them higher before expiration. This single expiring option for October was so far out of the money that I didn’t bother spending a few bucks to close it. There was a risk the market could backfire on me, but I figured the small risk was worth the few bucks. I tried to close it earlier, but my orders didn’t hit. Eventually, the risk wasn’t a concern and I left it alone.
The interesting part of my portfolio this week was how many of my November contracts needed to be rolled early. I probably would have rolled some of these even earlier this week if my arm was in better shape to type my updates. Instead, I used the time to focus on my clients’ accounts, which left my holdings on pause. Luckily, the UWM January puts I sold early in the week hit before the bulk of the latest leg of the rally. They are already starting to look safer and I’ll try to roll them higher before they expire, if possible.
I sorted all of my option contracts based on the ask price. Everything that was trading for less than $0.40 got my attention for a possible buyback or roll higher. I knew I was leaving a lot of money on the table by letting these cheap options take up space in my account instead of having higher strike options with more time value. I tried pricing new options for the same ETFs, but almost everything seemed hardly worth selling due to the very low volatility in the market right now.
After little while, I couldn’t find any ETFs I wanted to sell puts on so I came back to QCOM. It’s been a few months since I close my last Qualcomm puts and I thought I should ease back in again with a single contract. While QCOM was trading at $69.67, I sold to open one QCOM December $67.50 naked put for $1.98 and received $196.93 after commission.
After opening QCOM exposure again, I started to cut other positions without rolling them higher. While SPY was trading at $173.94, I bought to close one SPY November $160 for $0.18 and paid $18.89 with commission. The December and January SPY puts are so cheap, it might be better to buy calls instead. While I’m considering buying instead of selling, I might just go with different trades instead.
I have been trying to close my FEZ position for about a week and a half. At first, I tried to close my puts for a dime and then lowered my order to a nickel when I re-entered it this week as FEZ moved higher. (I thought a nickel was plenty, but I guess no sellers agreed.) Finally, I went back up to a dime today and my order hit. While FEZ was trading for $40.67, I bought to close two FEZ November $36 puts $0.10 and paid $21.53 including commission.
My IWM naked puts had gotten very cheap also. While IWM was trading at $110.29, I bought two close my three IWM November $103 puts for $0.28 each and paid $86.30 with commission. I should have just rolled these higher, because IWM was climbing quickly. A few minutes later while IWM was trading at $110.42, I sold three January IWM $110 naked puts for $3.58 each and received $1,071.68 after commission. If I had made the trade with a single order, I would have received an extra nickel on each of the January puts.
I’m still close to being fully invested after closing these cheap options and I’m not sure what my next trade will be. I have a couple of limit orders in place on FEZ and MVV. They are both priced to hit on any weakness through next week. That’s assuming prices don’t go too high before the next dip. I don’t know what the next catalyst will be to move stocks lower, but next week should include some government data coming back into the picture and more earnings reports. Either of these factors could move prices lower. It might just be that next week we see some profit taking. Then again, maybe we will just see the ascent continued. I am within $250 from $120,000 in this account. I’ve had a better year than I was expecting and don’t want to make stupid, overly aggressive moves at this point.