Celebrating one year of rolling

Trading options is fun and exciting. And in my opinion, less risky than buying stock. That is just my opinion, I might be biased. In a few days, I will be celebrating a postion that is a drag on my profit for 1 year now!

About a year ago, I was very into selling puts on goldminers. I have made a decent return on my puts in the first 8 months of 2016: 1363USD in fact. I was on a roll, I was the king of the world! (added for extra drama)

So, I kept writing puts on these miners. Why not?

And then people no longer wanted gold, miners were dull and the price went down, my puts went in the money, actually, deep in the money. Panic? No! Roll, yes!

Rolling1Y

We are now one year later, and here are the results

1 assignment at 28. Let me tell you, that hurts. When I add this buy to my positions, my average price goes up to 19 and change. Still making a profit.

3 puts at 27 that I have been rolling ever since. This rolling is not always easy and straight forward. Not always as I would like it to be. And the risk of assignment stays. The result so far is a return of 5,88% in premium (after all costs) on my position in one year. And this assumes that the positions expires out-of-the-money this summer

This not the kind of return that I look for, I aim for more in my options portfolio.

To be transparent, I will look to buy back my options, so my actual return will more be around 2-3 pct.

Good news, that is not a loss and beats the return on a savings account.

Bad news: that is below the return of the world ETF that I have. That one made approx 11pct since then.

It is not all sunshine in the options trading portfolios.

 

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6 thoughts on “Celebrating one year of rolling

  1. As I use options to boost Dividend output I am not concerned all that much about stellar returns, even 1% AROI CAN be fine (of course my target is much higher), as many of the dividend payers return 2%/3% yearly on average. I will have some “yearly rolls” soon too, this first year of trading options was very very hard at some points but I feel that I am covering some ground and hopefully will not fall for the same mistakes again in the future… 😛
    ciao ciao
    Stal

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  2. Impressive to roll something for a year! But it may not be a loss (at the moment) but it is a drag on your returns and it could be a drag for years …
    And that is why I stick to consumer goods compagnies with predictable cash flows to write puts on. Coca-cola, ADM, AB Inbev, Ahold in the past.
    With the consumer goods companies; worst case scenario is that you get stuck with shares of a great companies that pays a dividend that is still better than a savings account. Sooner or later you will be able to write profitable calls on them again.
    I try to avoid assignment but each and every time I write a put I run the scenario: what if there is a crash of 20%, I get assigned the shares and I am stuck with them for a couple of years?
    In my opinion you do not need to do a lot to get great returns. The two puts I did on AB inbev this year would have been more than enough to get an above 10% return on my cash this year.
    I really should do less trades, all this activity is violating rule 1 of being a sloth: do nothing.

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  3. It could have been worse. Like many others, I did not see the US market performing as it has for the past 6 or 8 months. I haven’t lost but I haven’t taken full advantage either. I hate losing more than I like winning.

    I’ve never been a big options trader. I started looking at options on healthcare stocks a few months ago. That was my industry for 20 years. I saw a few opportunities but didn’t pull the trigger.

    I’ve been sidetracked but things look to be clearing up. Might be a good time to start back with options trading again.

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  4. I can totally relate, ATL! I’ve been rolling gold for a year as well. Seemed like a good put to sell at the time…..

    Liked by 1 person

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