Options Expiration – February 2019

My one XLB February $52 covered call was my only option I had that expired today and it’s $2.24 in the money as I write this mid-morning on Friday. I’m letting it expire in the money and my 100 shares of XLB will be called away. I’ll end up with a realized gain of $218.66, including the premiums I’ve received since the first $53 strike naked put I sold in October and the covered call that I sold in January. That’s a 4.39% gain on a trade I didn’t time that well.

My 200 AAPL shares were a bad trade from the beginning when I sold an extra put by mistake (that was also assigned). Just after the open this morning, when AAPL was trading at $171.41, I closed half of my position by selling 100 shares for $171.41 and bought my AAPL March $155 covered call for $17.21. I’ll have a realized loss of over $3,500 on this series of trades, but already deleted my costs in my spreadsheet, so I don’t have an exact figure. It wasn’t good and that’s what matters.

Sticking with AAPL, I decided to go ahead and sell another covered call on my remaining 100 shares so I could either start over if assigned or further reduce my cost per share if it doesn’t move above my strike by option expiration. While AAPL was trading at $170.60, I sold one AAPL April $175 covered call for $4.55 and received $454.32 after paying $0.68 in commission. Based on the price when my trade went through, if AAPL finishes April options expiration at the exact same price, I’ll make a 2.66% gain, 15.05% annualized. If my covered call is assigned, I’ll make 5.24%, 29.63% annualized, leaving me with $894.32 more than before my trade. I can’t look at what the loss would be when making my decision. I can only base it on where AAPL is trading right now. There could be plenty more upside gains that I’ll miss out on, but I’m ready to move on, especially if I can gain nearly $1,000 over what I have now.

After clearing out on of my March options, I moved on my ADI March option too. While ADI was trading at $105.29, I sold my 100 shares for $105.29 and bought my ADI March $90 covered call for $15.57, plus the combined commission of $2.24 that I paid. I could’ve waited for options expiration next month, but that would’ve given me another $28 plus commissions. $30ish wasn’t enough for me to keep that cash tied up. I ended up with a gain of $406.43, 4.02% since I sold the initial put in November. I can be happy with that gain over only three months.

With these trades, I’ll have less than half my cash invested. That’s far too much to leave in cash, but the speed of the current rally since the Christmas Eve low, gives me pause. Most indexes are close to their 200-day moving averages now and they could break either way. I’m going to wait until next week to add some more risk, hopefully on a dip.