Options Expiration – June 2020

I have three different option contracts expiring worthless today. My five TLT June $145 covered puts are nearly $16 out of the money and give me a realized gain of $288.41. However, I paid $213.19 in dividends and $25.90 in short interest for my short position. The difference is a net gain of $49.32. My goal with that trade was just to cover the cost of being short and it worked. I’ve already sold a replacement trade for August that is working in my favor so far.

The other side of my TLT option combo, my five TLT June $180 naked calls, is expiring worthless too and gives me a realized gain of $1,743.83. I have no offsetting costs with this trade so it’s all profit. I’ve replaced this trade already too. I sold five TLT August $170 naked calls that currently have a paper profit, but not a lot yet. They should see a quicker decline in time value through July.

The only other option I had in play for June expiration is on Microsoft. My MSFT June $155 naked put is nearly $45 out of the money and will leave me with a realized gain of $1,014.36. While I’m still a believer in MSFT’s story, I am waiting for a price dip before I replace this position. MSFT is trading close to the top of its ascending trading channel, which makes it less attractive as my next trade. I might end up entering a limit order that would trigger on a $5-6 price decline, but haven’t figured out my plan yet.

Instead of MSFT, I might sell an MDY naked put soon. MDY is off its very recent highs, but its bounce off the more recent lows was stopped at its descending trend line of lower highs today. I want to wait to see how this trend plays out before extending myself again. As with MFST, I might enter a limit order for an out of the money naked put soon.

We’re getting into trickier territory this summer. Stimulus income for those out of work ends next month and at the same time, we’re seeing COVID-19 counts climb and the percentage of those testing positive increase too. We’ll know in the next few weeks if these infections result in more hospital admissions and deaths. While businesses are opening across the country, I doubt the stability of the recovery in both how much ground we can recover in corporate profits and how long the expansion can last. I’ve yet to hear a scientist or doctor say they don’t foresee another big wave coming this fall as schools open again.