You may notice that there will be times when the underlying ticker that you are selling options on will perform much better than the premium that you brought in from selling the put. This past week was definitely one of those weeks. When the market goes up more than usual, the rise in the share price outpaces what you made on selling the option.
We can look at the put that we sold last week on USAR. We sold a put with a strike price of $15 with an expiration date of 10/3. By the time the expiration date arrived the price had risen to close on Friday at $25.96. So the $80 that we collected pales in comparison to what we would have made if we had just purchased 100 shares.
If you look at situations as to what you could have made if you had done such and such, you’ll often feel frustrated at missed opportunities. But the fact is that we don’t know when the market will make a run up. Selling options to collect premium ensures that you make the money on the premium even though in some cases you have to manage positions when the price drops. If we had knowledge ahead of time what the market was going to do, it would be much easier to make money. But of course that would change the entire makeup of how the market works.
Week 23 Results
Here are the put options we started the week off with:
We also started the week off holding 100 shares of SERV that we had gotten assigned on the previous week. So the first thing I did on Monday morning was to sell a call on the SERV shares I was holding. I sold the call at a strike price of $13 because that is the price I bought the shares for. I also chose an expiration date of 10/3 (4 DTE) hoping that the price would rise to above that by the end of the week so I could sell the shares. For the call I collected a premium of $25.
Also on Monday I opened a new position by selling a put on RIOT with a strike price of $17.50 and an expiration date of 10/10 (11 DTE). I collected a premium of $64 for this trade.
By Friday I was able to let my USAR put expire as the share price was well above my strike price. The share price of SERV had also risen a good amount through the week so my call got assigned and I was able to sell the shares on SERV. I was also pleased to see that the share price for TMC ended the week at $7.41. So as long as the price stays above $7 over the next couple of weeks I’ll be able to let my TMC put expire on the 17th.
Summary
For the week I collected a total of $88.92 in net premiums. My target for week 23 is $81.61. For the first 23 weeks since I started I have collected a total of $1,888.28 in net premiums. My target for the first 23 weeks is $1,740.26.
At this point I’m in a fairly solid position. Of the two puts I still have open, both of them are out of the money at least at this point. It certainly has helped that the market has been doing so well overall lately.
Here is a screenshot of my account positions as well as the summary for week 23. You’ll notice that the SERV shares are still showing, but those will drop off by Monday morning along with the assigned put and the expired put on USAR.
You may notice that this is the first week that our actual account balance at the end of the week is higher than our target since we are ahead on our premium target as well as the fact that there is a fairly small value left on the two open positions. Below is a link to the article which outlines the details of the strategy that I use with the options wheel.