After a weekend filled with exercise with some new skeelers, and a great frugal Saturday morning breakfast with blue (berry) pancakes (ok, it’s more purple…).
— Cheesy Finance (@CheesyFinance) May 20, 2017
It’s time for the first official options trading update. After being motivated by Amber Tree Leaves, with his passionate presentation in Antwerp, I’ve started trading options as of late March (Mrs CF does not care about this at all). I also wrote up the basics of options trading in this post. But, without further ado, here is the April 2017 Options Trading Update.
April 2017 Options Trading Update
Without a good feel for how this work, no clear strategy and just wanting to have some fun. I’ve started full steam ahead (smart? probably not). However, we actually ended the month with a bit of money made! The options trading income for April was €130.
See below for an option trading overview for the month of April.
The Options Trading Strategy
As noted earlier, there was no real strategy for options trading so far (other then a few high level ideas outlined in the initial post on options trading). Primarily as I was trying to find out what works for me and what I feel comfortable with. But I think I have found some rules that I should trade by:
- Only trade options with stock you don’t mind owning, or better, actually want to own;
- Use limit orders to write both puts and calls
- Make sure the strike price is about 5-10% from trading value of that time
- Trade with expiration dates of about 30-90 days in the future
- Roll options within 10-30 days from the expiration date if you don’t want to be assigned the shares just yet
- Accept an assignment of shares if the strike price is acceptable, and turn around to collect both dividend and write call options
- Trade often and trade small
- Develop a specific strategy for the stock/options and stick to it!
Actually already ignored the above last week and bought/traded options on a share of a company I could normally not consider….. Boskalis (a maritime service provider). Their ex-dividend date was May and it pays a nice €1 per share (it’s a yearly dividend payer). They are not doing so peachy at the moment, and were punished in the stock market by dropping around 10%.
I thought to be smart and bought before the ex-dividend date at a relatively low price for that day. But then in the next week it plummets another 7%…ouch. I’m therefore now trading call options on this stock to recover from the loss in share value (even after the dividend payment is included!). It is going to take some time for this (paper) loss to be corrected with options trading. Dump move, as I don’t want to own this stock for the long term.
The moral of this story, stick to your own trading rules! A quick win can bite you in the a$$ and turn around into a loss really quickly.
Any trading mistakes on your end? How was your options trading for last month and this?