Recently a lot of people have asked what kinds of things I look for when choosing which tickers I’m going to trade options on. In general, one of the first things I look for is something with a high enough premium that I can use a relatively small amount of capital on to reach close to my target premium for the week. Of course there are other factors that I look at as well.
One of the other factors I look at is the analysts price targets. Of course we know that the experts aren’t always right. But they at least have enough experience to make a fairly well educated guess on where the stock is going in the future. Usually these targets are in a range which can vary widely. But my preference is to not enter a position by selling a put on a ticker where the share price is toward the top of the analysts price target range.
Another thing I look at is the chart and what things look like as far as the trends go. Some people really go deep into analyzing this, but I like to keep it fairly simple and not overthink it. Sometimes a stock will have a trend where it has big ups and downs but mostly stays within a range. In these cases I prefer to sell a put where it is near the bottom of that range. Or maybe a stock is kind of floating around in a fairly tight range. This typically works well for what I’m looking for.
This week I opened a new position on RUN which I did once before in this account. You can see from the image below that the price targets have a pretty wide range. The price targets from 18 analysts range from $6 – $30. So the current share price being between $16 – $17 falls a little below the middle of this range.
If we look at the daily chart for RUN you can see that has come up quite a bit since the middle of May, but for about the past month it has stayed somewhat steady.
Week 21 Results
The week started out with the following positions:
I was fairly confident that my AAOI put would be able to expire at the end of the week. And my USAR put was in the money at the beginning of the week, but I decided to let it play out and hope that things would ride through the week. I opened a new position on Tuesday by selling a put on RUN with a strike price of $16 expiring 9/26 (10 DTE). For this trade I collected a premium of $76.
By the end of the week the market had gone up significantly so both my expiring puts I was able to let go by letting them expire worthless. I decided not to open anything else new even though I was a little short of my target premium for the week because it was so close to my target. This would give me a little more comfort level starting next week out going into it with only using $3,350 of my cash as collateral for my open puts.
Here is a chart of my trades since the beginning of August:
Summary
For week 21 I collected $75.96 in net premiums after fees. My target for week 21 is $80.48. Total net premiums collected for the first 21 weeks is $1,713.48 and my target for the first 21 weeks is $1,577.61.
My target is to have doubled the account by week 100 or just under 2 years. Here are snapshots of my account positions and the summary for the end of week 21.
Read: How to Generate Consistent Profits Through Options Trading