I thought I would start a thread showing all my trades for one of my accounts (credit to DMoney for the idea). This is a $10,000 account and the goal is to write options and generate continuous income. I don't want to be holding many stocks in my portfolio, but if I sell any naked puts they will be at prices I am comfortable owning the shares at. Either that or I'll roll them.
I'll primarily be using the following simple strategies:
- selling puts
- selling covered calls
- buying calls/puts
- bull call spreads (BuCS)
- bear call spreads (BeCS)
- bull put spreads (BuPS)
- bear put spreads (BePS)
I have already executed a few trades which I'll list below. From here on I'll be updating in real time.
My AAPL BuPS expiring in July look to be on track to finish out of the money. I may get assigned CLF which I will gladly take and start writing covered calls on. I am happy taking the risk on AAPL because even if the stock tanks and wipes out a fair bit of this account I have cash on hand to take advantage of a great buying opportunity. The risk/reward that this strategy offers suits me quite well at this stage of my life.
I may stay dormant until options expiry and Apple earnings. Depending on what happens after that I might look into some 2013/14 BuCS deep out of the money.
Decided to funnel a bit of my profit into a high risk high reward bull call spread. I see a reasonable chance AAPL can make $700 in 3 months given earnings are tomorrow and te next iPhone will likely be out by then. Potential $435 gain on a $65 stake.
Will adjust the totals with commissions after I get my statement.
Potential $450 gain if AAPL pops after hours. Not expecting it to happen and it's profit I'm happy to risk. As more info comes in it seems more and more likely that AAPL has been pushed down and is going to report awesome numbers.
I fully expect both of these to expire in the money. $675 is only 17% higher than the current price and $630 is under 10% higher and I've allowed 17 months for it to get there. No doubt earnings will grow far more than this so unless the P/E compresses even further this should be all but a sure thing. Very attractive gain for such a low risk trade. There is a good chance we hit these levels much earlier at which point I'll probably close them off to lock in profits.
My gamble on AAPL earnings didn't pay off. My SEP BuCS doesn't look good either but I went into these trades risking a little profit knowing odds of success were low. Fortunately I allowed enough downside room on my BuPS at $555/560 that it looks they will expire worthless despite AAPL's drop. Glad I played it safe. I am looking to get into a put or put spread on AMZN this morning to play their earnings which I think will disappoint. Another gamble, but with AAPL, NFLX, ZNGA, FB etc all dropping recently it looks like it won't take much to send AMZN down, considering they may report a loss and their current valuation is ridiculous.
It looks like I may get assigned my CLF put at $40.00 which I don't mind. Earnings are out this morning, so we'll see what happens. I'm suprised it's dropped so quickly from the $45 level considering how undervalued it is to begin with. I'm happy to write covered calls on it and collect what looks to be a high, safe dividend while I wait for price to recover.
I have been out of town for the last week and didn't get a chance to update the journal. I'm sure you have all heard about the Knight Capital trading glitch fiasco by now. As shares were plummeting toward $3 on Thursday I couldn't resist the opportunity to vultch:
No doubt it's a gamble but I feel KCG is a huge brokerage and will either recover or get bought out. They have been in the industry for a long time and represent a large retail base. Some will definitely leave because of this glitch but many will find it too bothersome or simply won't be able to. Trading glitches can happen to anyone and I feel the shares have been beaten down far too much.
I thought I had made a huge mistake as shares dipped below $2.00 after hours on Thursday but made an awesome recovery yesterday to finish around $4.00. This is going to be an up and down ride. I could have got even juicier premiums if I had waited but I'm happy with my positions. If I get assigned the shares my ACB will be around $2.50 and I'll start writing covered calls on them right away. If KCG stays above $4.00 then the proceeds will be a great boost to my account.
In other news, my AUG AAPL and AMZN spreads are on track to expire worthless. My puts on CLF and CDE could go either way. I am doing quite well so far but it's early. I really enjoy this kind of trading. Moderately high (but controlled) risk and high reward.