First month of 2018 Option income

Options always work for you. The goal is that they work hard and reach 0 by expiration. At least, that is what my strategy of option writing is about.  January was a normal month. The last days were difficult and early February is bad…

Option income – 648,34€

With the experience and stats of 2017, I consider this a normal, average month. It puts me on track to a 11-13pct return on my invested capital.  So, nothing to complain here.

OptionIncome201801

The option income came from 14 stock/ETFs. I quite like that the income is diversified and not depending on one big lucky shot. That being said, the most profit came from one ETF, for a total of 18 pct. The next one is around 13pct. That makes 31pct of the profit from just 2 stock. Good news is that it represents multiple trades in these stock.

Until now, my option trading has been around selling puts. This means, I need the market to go up, stay where it is or only have a small down move. I have said it before: that is not sustainable. How to deal with it?

Uncorrelated assets

My mix of stock has some (un)correlated items with gold, silver and oil next to “regular” stock. I also try to add some stock that went through a correction – assuming that they will correct less in a market correction. Time will tell…

Next to that, I now start to sell calls as well. It requires the market to go down, stay where it is or not go up a lot. Actually, i combine the puts and calls on the same stock. Results so far: not a lot. I guess it takes time to have enough trades to analyse if this is for me or not. What bothers me most are the naked calls. I can not manage these well. Maybe I need to adopt more a trading strategy and take losses…

Elephants in the room

TEVA – grandfather elephant

Still there, now 22pct ITM… Best it has ever been. I keep it for now, rather than trying to reduce it. There is almost no credit accumulated into the position.

(not disclosed) – father elephant

17 pct ITM. When it is rolling time, I will see if I can lower the strike a little. Or try to maximize the credit I can get. Once enough credit is accumulated, I might be able to quit the trade.

AMS:AD – baby elephant

Went down to only one ITM option. Back to 2 positions.

EBR:ABI – This is actually now a mega size elephant. I got too excited when it reached a “support” and now it is just too big in my portfolio. A good lesson. I learned that a position should never be too big. I think 20pct is a good limit. It could also mean I throw in some protection options.

 

How was your option month?

 

Advertisements

4 thoughts on “First month of 2018 Option income

  1. ABI is also my major elephant, but it doesn’t bother me at all. I’ve got approximately 12 puts sold on them and still feeling confident. In case they don’t recover quick enough I’ll buy 100-200 and roll over the other contracts. I love owning this company despite their high level of debt.

    Solid income this month!

    Like

  2. My month wasn’t all that great, options-wise, mostly due to a roll on VTR that wiped all gains and got me in the red! I guess the first months of 2018 will be pretty hard, I have used part of the available cash to buy stocks that were interesting for their prices and that means that I take away funds from options operations… Considering selling spreads, but haven’t done it yet…
    Cia ociao
    Stal

    Like

  3. I couldn’t stand the elephants and closed out all contracts last year, painful decision but glad I did. Don’t like this form of looming “debt” / “Risk” above my head, especially if it’s not completely cash/stock secured. Expensive lesson learned, but a valuable one indeed.

    Impressive that you still continue and make a good euro too!

    Like

  4. AB Inbev is an elephant here too. Well starting to become Mammoth actually. But I am also confident in the position; so holding on and sweating it out at the moment…
    But yeah, there was a reason why I didn’t want to be leveraged anymore on my puts.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s