Welcome to my third month Review (November). 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. In this past I purchased dividend stocks, Exchange Traded Funds (ETFS) and sold covered calls. I really did not have much of a plan with my trading. This is the third month of working my plan. My goal is not perfection but to learn each month and improve my investing strategy. Below Is the review on how I did and what I learned in November.
In November I did a total of 14 trades and 16 options contracts. Due to the election, Thanksgiving and just being busy during the holidays, I did not spend as much time trying to find good investments. I made a total of $1,315.75 for the month in option premiums. Which was higher than September but less than October. I did two vertical call credit spreads and eight covered calls. I only did four cash secured puts for November.
I increased my risk level in several stocks above the .20/-.20 delta. The highest risk I took was ARKK at .2992 delta. The other two high delta trades on VZ and GLW were closed. In November ARKK increased dramatically. This is primarily because its biggest holding is Tesla. Tesla nearly doubled in November. By the end of the month, I was way in the money on my ARKK trades. The price of ARKK had shot up above my strike price of $115. The added risk was not worth it on ARKK. However, even with a lower delta I would still be in the money. The most valuable lesson here is that ARKK due to its underlying holdings is too volatile for being part of a safe option strategy. My hope is that ARKK will once again move to being out of the money due to a market correction. Meaning I think it has increased to much and will come back down at some point. If I am wrong my two options are either to take a loss or Roll the option out to either a later date or a higher strike price.
Below you can see all my trades. I also included after the spreadsheet some of the things I learned in my second month. Please let me know if you have any questions or comments?
Things Learned:
- Did 14 trades this month with 11 stocks. I am finding that I am trading a lot of the same stocks each month.
- I did two vertical call spreads this month. (MSFT, ARKK) Just a reminder that these trades require less margin than a naked call. Typically, it requires the difference between the strike prices on the contracts. In the case of MSFT, the margin was $2,353. The margin was calculated by taking the difference in strike prices and then subtracting the premium minus any costs. In this case the margin of $2,353 was calculated as ($260 – $235 – 1.467) * 100.
- You will notice that I closed one of the GLW covered call contracts. During the month, the GLW stock price came really close to being in the money. Meaning it had a good chance of being assigned. I decided to close one of the contracts because I did not want both contracts to be assigned. I was ok with one but not two. The stock price near expiration moved more out of the money and the other one expired.
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