There are many paths to Financial Independence. Passive Income is what a lot of paths have in common. So does our path. Some might argue that one of our paths is not that passive due to the nature of option trading….
Option Income
February was an excellent month in option trading. The best month ever since I started in August 2015! Agreed, some is luck, a lot is having a system and taking on risk. The result is 587,87€ of realised profit. This is the best month ever.
Why this high result?
- The bid on Unilever sent the stock way above 44€ This allowed me to close one of my in-the-money positions that I was rolling for quite a while. It generated a nice profit. I had a little side trade as well on UNA. So, thank you Kraft!
- At the end of January, I had a nice windfall. Rather than pumping it into our index funds, I decided to use it as a learning tool for option writing. That money is now reserved for covered put writing on DGI stock I would not mind owning. Off course, I do have some criteria to decide on the strike price I am willing to accept. I will not chase a stock forever. This cash allowed me to write puts that are almost At-The -Money and thus bring in more profit per trade. More details to come in a later post.
Should we start a party?
Not quite yet. I still have too much emotions and greed in my trading. I need to further work on my system and be more mechanical in trading. Not sticking to the system and wanting to squeeze out more, actually makes me sitting longer on some trades that are with me since the summer. Being mechanical would have meant a small profit, and new trades with less risk. A valuable lessons. Trade small, trade often and be mechanical!
Dividend Income
We should also honour the small amounts of cash that are sent our way. I got a full 7,28€ in dividend in February. March will be better as the good old Shell will pay me.
How was your passive income?
amber tree leaves 
I kept building my unilever, but by $300 here and there, wish I would have used big money it.
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Now that I focus more on dgi stick with my option trading, I start to see the value that dgi can bring to a portfolio. So, I understand you
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Nice job ATL. I like selling at or near the money options. Premiums are great. When I do this, I generally look for short timelines, 2-weeks or less. It’s worked for me so far 😉
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Thx for sharing. I might give it a try as well, these 2 weeks options.
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Good stuff there ATL!!! 🙂
When old positions are closed capital is freed and so it’s profit… I have the same situation in some “bad” trades that I keep rolling and rolling… Some of them will be with me for a long time, others I hope to close soon. But it’s the beauty of options, if you have patience there is no “bad trade” to be had…
Compliments on the record setting month!!
ciao ciao
Stal
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Great bit of income Mr AT! Spectacular growth in the options income.
We liked the UNA jump as well, made a paper profit of €1500 or so. But not planning to sell (yet), bought the shares for their dividend, not the capital gains (well, maybe a little bit).
We got approval today for options trading, now just need to figure out what and how we want to be trading. Might give you a call one of these days to discuss some options (pun intended).
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I love options on options!
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congratulation on the new high in trading options!
The snowball is starting to roll. 🙂
stick to your system und you gonna make it in no time 🙂
best regards
Chri
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Finally somebody has seen the light!! Options are done best on boring companies with stable income. When assigned the dividend makes it a lot more pleasant to be stuck with them for some time. The profits there are nice enough, no reason at all to go meddle with commodities, mining stock (who often have a huge amount of leverage built into the company) or gold!! The only downside of those almost at-the-money options is the tax of 0.27% when being assigned the stock. If then on the flip side your first written call is also called you just lost 0.54% to the Belgian government. Cool book on options is Optiedronken by Jacky de donder. Do not let the ugly cover scare you off, the guys knows what he is talking about (it is out of print, perhaps the local library has it and if not I have a copy lying around somewhere …).
As said before, with my leveraged construction it is a bit difficult for me too keep track of profits but my stock position (BRK) did rack up 10.000 USD in capital gains the first three days of this week. I found that very funny as I was drunk for most of Monday and Tuesday!
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Carnaval? You party animal!
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Nice profit! Starts to count…
Yesterday I sold an in the money put option on ABI after their results. Trying to focus a bit more on euro stocks as the USD is trading expensive. Strike 110 and premium 11,60 (month of may). We’ll see how it turns out as they also go ex div 2 weeks before the strike and publish their 1st quarter results ’17 around 2 May. Wouldn’t mind owning more of them as I already own 30 shares for which 98,6 seems a fair price.
Nonetheless I’m still following General Mills too and might write an option when it declines just a bit more. I want to have a little more margin because of the strong USD. However GIS is a very stable, low volatile DG stock with solid earnings, normal debt and premium products.
I might consider even writing another put in May, depending on ABI’s stock price. Overweight in ABI would be possible but I really have faith in Brito’s debt paying abilities and 3G capital’s cost-cutting abilities which result in higher margins. Dividend is not bad too.
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Bold move, this abi put. I am writing near the money puts since January.that is almost half of my profit. After an analysis I did yesterday, I feel I should go closer to the money
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Initially I started at the money or slightly in the money, couldn’t complain about the profits (around 3-4% on 3 months) but it felt like the opportunity cost of not being able to use the money was a bit high. I might change back to these tactics as it yields pretty good on a yearly basis; but for ABI the risk/reward is pretty good in my opinion (56% on a 1 year basis). I’m not used to having big sums of cash available, so if the option would be exercised, I still have enough cash available (also because I sold Melexis).
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ABI is on my radar for a dividend play. They go ex dividend 25 of april I read somewhere (not on their corporate site). I would write a put, be assigned and the write covered calls…
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Smart tactics! A combination of naked puts and covered calls might also seem interesting when assigned. I’ll look more into the strategy if the current option would be exercised. Depending on their price after their Q1 results in May, there will already be more transparency about their performance.
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Nice profits! Just stumbled upon one of your comments on easydividend’s blog.
You mentioned selling puts (?) closer to the money. I am sure you are aware, but the current market conditions won’t last forever. What has worked especially well since the US elections can come to a very sudden halt.
I would suggest you keep selling puts that are not THAT close to the money.
Personally, I am doing “poor man’s covered calls”, substituting the shares with calls (6+ months out). This allows writing calls without owning the stocks (and the corresponding risk) and yields a nice return. Maybe google it and try it out yourself.
I wish you all the best in your journey to financial freedom and will follow this blog closely 🙂
All the best,
Kilian
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thx for stopping by. On easydividend, I indeed mentioned selling puts almost ATM. I shifted from US stock and ETF to EU. My focus now is on DGI stock that I still find priced ok… I like the current dividend yield and the outlook. I only do this for a art of my options: I have some cash waiting to be invested.That is money used for ATM puts.
Read your blog… enjoy the journey as well
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You are doing really well with those options premiums. That’s a very healthy sum to bring in no matter how you look at it. Keep to your system. It seems to be working quite well. Any plans to continue buying more shares to juice your divided income a bit as well?
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With some extra funds I have received/freed up, I do consider buying DGI stock and then write covered calls against these stock for extra yield.
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Amazing option results ATL, keep up the good work!
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thx…!
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Congrats on the results! I hope to report my first passive income soon! 🙂
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Looking forward to that!
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I didn’t have nearly as good of a month as you did. I made $200 in passive income off my dividends which I was super happy with. I rolled them into more shares and hope that they continue to do well into the future 🙂
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Compounding… The best force in the FI world.
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