$1,584.95 of stock option premium for January 2021

Welcome to my fifth month Review (January). I just want to remind everyone that I do not offer financial advice, this an opinion blog about money. The main emphasis of this site is that you can earn easy income through dividends and safe option strategies. Below Is the review on how I did and what I learned in January 2021.

It is hard to believe that I have been doing this for five months. I am happy with my results. For January I was able to earn $1,584.95 on 18 trades. The average was $88.05 per trade. I did not have any options get assigned in January. For the five months I have averaged $1,492.59 per month on 79 trades. The average for the 79 trades is $94.47. I have only had one contract on DVY get assigned back in December. I have had to roll call options in both ARKK and NVIDIA. For these options I am trying to get more premium and avoid assignment. I have a separate Rolling Options post on how I have rolled these trades. In short, I sold the existing option and bought a new position in the future. My goal in every roll must gain more premium and to increase probability that the option will move out of the money. For instance, for ARKK the current price is around $150. My hope is that the ETF will pull back to around $125.

I have continued with the investing strategies below. I also put the month the strategy was adopted.

Earn $1,000 each month through safe option strategies. (September)
Primarily focus on covered call and cash secured put strategies. (September)
Pick strike prices that are either 10% above or below the current price. This allowed me either purchase or sell a stock at a good value. Meaning I am good with assignment. (September)
Look at options that expire between 30 – 60 Days. Not a hard and fast rule. My goal is to find good premium for the trade. (September)
Use Delta in options to determine the probability. Try to use a probability of staying .20 for staying out of the money. (October)
Use Vertical Credit Spreads to reduce required margin and risk. (October)

The plan above has kept me out of trouble and allowed me to earn some good premium. Delta and my 10% pricing rule do help. However, when an investment goes through an extreme movement up or down, the rules will not keep you out of trouble. In these instances, you must manage the trade and either close it for a loss or roll it in hope that your investment will come back into the money. Due to my experience with having to roll ARKK and NVIDIA I am going to make the following changes to my list of guidelines.

I am going to up the $1,000 to $1,500 a month through safe option strategies.
Do not Invest in high volatile stocks and ETFs like ARKK and NVIDIA. Both have increased more the 100% in the last six months and over 400% since last year’s March low.
Going to add Iron Condor Credit strategy to my plan. Going to only use it on stock that I own or want to own. Also, going to do the trades with higher probability of success. To start out a probability of .15. Meaning 85% probability of success on both the call and put spreads. Due to the higher premium, I can take on a bit more risk.

This has been an interesting journey so far. I have learned a lot by doing the trades. My understanding of how options work is so much better now compared to when I started. I am also surprised at how much more I can learn and improve my trades. I am going to continue to increase my monthly earnings and start to do trades in my retirement accounts. I am a believer in the 4 percent rule. Meaning you can withdraw 4% from your portfolio and it should last 30 or so years. To earn this kind of income using this rule you would need $450,000 in your portfolio. Using safe investment strategies can have a major impact on both when you retire and how you retire.

Below you can see all my trades for January 2021. I also included after the spreadsheet some of the things I learned this month. Please let me know if you have any questions or comments?

Things Learned:

Continue to do trades on the same group of 13 stocks and ETFs.
Rolled ARKK and was able to gain more premium and increase the strike price. However, it continues to reach new highs.
MSFT had a good earnings report and has also gone into the money. The stock has gone to around $245. I am going to roll it next month if it does not come back into the money. (Less than 240)
I closed two vertical credit spreads. In both cases I only bought back the shorted option and let the purchased option expire. This is why the cost was $1.95. (.65 x 3 trades)

View Next Month’s Results