Options Expiration – September 2018

I had two options expire today and one assigned last night. As I mentioned yesterday, I thought my FEZ September $40 naked put and my XLB September $60 covered call would be assigned last night. My XLB shares were called away last night, but my FEZ put was not assigned. I was rushing through my post yesterday and didn’t think it through all the way. There was no reason for someone to assign the FEZ shares to me a day early because that would’ve given me the dividend paid today. It was better for the put holder to keep their shares and take the dividend themselves. The shares will be assigned tonight and I’ve already sold a covered call for my exit strategy or to at least reduce my cost per share if the covered call isn’t assigned in November.

Since I owned the XLB shares, it did make sense for someone to assign the option so they could get the dividend today instead of me. I took a realized gain of $31.21 on my XLB series of trades after I bought the shares at $63 from the March $63 naked put I sold. I received $134.32 from the put which brought my cost down. I also received $27.98 in dividends on June 27 and then sold this September covered call for $168.91 net after commission. That’s $3.31 per share that I saved on my cost per share.

The cool part on XLB is that it was trading at $63.01 when I sold the put at the end of January. Although XLB is trading at $60.44 as I write this, I made a profit thanks to the options and dividend. I’m going to wait until next week to decide if I want to sell a new naked put on XLB or work a new ETF or stock.

My GS September $245 covered call will not be assigned tonight since it’s trading out of the money. I already sold a new covered call on the shares I own and have reduced my cost per share down by $21.16 so far. GS is trading at $235.36 right now and I have a paper loss which will become a realized loss if the shares are assigned at my November $240 strike. The GS November $240 covered call is worth $5.30 as of today, so if the shares are called away at $240, I’ll gain roughly $1,000 over the value of the position right now – $530 in time value plus $464 in intrinsic value. I’d be happy to have $1,000 more in two months, but I would love to be able to roll the strike higher in November for more premium and a higher sale price.

Due to the XLB assignment, new premiums I’ve taken in recently, and the fact that I haven’t replaced XLB and ADI yet, I have some cash to work with next week.