June 2017 Options Trading Update

I’m not very good at getting these options trading updates out on time. Probably because I don’t have a good system yet to update my trades automatically into a spreadsheet. Doing this work manually is a pain in the @$$. But with some perseverance one can come a long way, so here is the (belated) June 2017 Options Trading Update.

June 2017 Options Trading Update

The options trading income for June was a €142.50. Interestingly enough this was all derived from writing call options. Guess the market went down a bit in June (or at least the shares I chose to write options for).

June 2017 Options Trading Update
June 2017 Options Trading Update

Below an option trading overview for 2017 is provided with the monthly and total YTD incomes. So far the options trading generated a total of €449.25. This totally blows my mind, never expected this type of return from options trading within the first 3 months. How long can this winning streak continue (spoiler alert, not very long)?

Monthly Options Trading Income
Monthly Options Trading Income

Experiences

Based on the last 3 months I’ve learned the following:

  • I’ve noticed that I use options too much for “day trading”. This can be good sometimes, but I noticed that I prefer a more passive approach to options trading;
  • Need to learn to look more at a 1-3 month window;
  • Also need to be more picky in the option premiums I select;
  • I’ve only been trading options in about 5 stocks on the AEX, to make this options trading work for the longer term I would need to switch to a different broker and be able to trade US stocks as well (need a broader selection);
  • Options trading is fun, but can be challenging to make correct judgments on strike price and premiums (see notes above); and,
  • It takes more effort than I realized (rookie issue perhaps).

Options Trading Forecast

Ok, the forecast for July is not very good. Actually I’m going to be losing money this month (on paper any ways). Due to the violent swings in Ahold (downward…) I was “in-the-money” with a put option and had to roll the option to the end of the year to get back into the black. But because I report closed trades for each month, I’m going to incur some losses in July that will hopefully recover later in the year.

I’ve also had a similar issue with a call option for ABN, but this went to other way around. I don’t want to have the ABN shares for the long run (bought for the dividend and some speculation) so I want to close this position with a profit. However, I would like to do this with as much profit as possible. So I rolled the (still) in-the-money call to the end of the year and (hopefully) have the option being exercised for a higher strike price. In this way I will get the premium and a reasonable return on investment based on the purchase price of the shares and the dividend it generates for this year. If the option is exercised I should make a ROI of about 8% in about 7 months. Not bad, right? If not exercised I could still sell the shares or continue to collect premiums with writing call options, all depending on the share prices……. there are many “options” 😉

How did you do on the options trading front?

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11 Comments

  1. Please keep posting these option trading posts Cheesy Finance. I’ve mostly avoided options, but I’m curious how this will work out for you. So, I’m watching it closely!

    1. Will certainly do, it’s fun and also highly interesting to myself to see how this all works. I’m starting to see how some people make this into a highly lucrative investment vehicle.

  2. Income from calls is great. And I know what you mean with ahold… I decided to double down. So far so good… Still a long way to go.

    What I do when I roll: I add the 2 trades together and report nothing in the month of the roll. That way, paper losses do not cause a problem.

    The point I struggle with: what to do when assigned! Report the premium or use the premium to log the purchase price of the stock lower than the strike…

    1. I struggled too, but decided to just report the premiums when and as they come. The rest is reported under the dividend income updates. Should have it covered!

  3. I don’t know much about options trading (just the basic fundamentals) so I do have one question. The returns so far seem interesting, but how much risk is associated with it?
    In other words: how high is your potential loss in regards to the monthly profits of Euro 130 – Euro 170 you are making?

    1. The only risk I have is that option is exercised and I have to either sell or purchase the shares for the strike price. Depending on what the undelying share price is doing, I could have a (paper) loss on the shares. But considering I’m only trading call options at strike prices above the purchase price of the shares, I would always make a profit. As for the put options, I could be assigned shares at a price that is higher than the going price at that time = paper loss. But since I don’t mind owning the shares, I’m ok with that as i will keep the shares for the dividend.
      There is also another “option”, which is to roll the option to a lower strike price, longer duration or both. In that case you can avoid assignment and make more profit.
      In short, you have the same (or less) risk as with just trading shares.

  4. Yeah, we averaged down a bit on Ahold and now own 700 shares, but too much for my liking. Trading some call (and put) options seemed the right thing to do.

  5. You could just skip all the statistic overview. Spreadsheets, graphs, all too much work! Just do what I do: report what you did and why. Easy peasy, takes only 10 minutes to write the post. And personally I find the reasoning behind a trade more interesting than the exact profit % (well that is the justification I use for me being too lazy to keep such detailed info. And I am sticking to it!).
    But nice result for only a couple of months. Options take a while to get the hang of. Ahold will sort itself out; and even if you need to keep it for some time, the dividend isn’t bad either.

    1. I’m not too worried about the posts, I want to see the data to see how my trading is going and where I can improve. Once I get the hang of it, I’m also going to be less worried about the tracking and reporting.
      Still planning on keeping AH and continue trading options, but it will have to be profitable!

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