The stock market this week performed very well over all. This makes things easier to make money when selling puts for premium. Some people wonder if it is better selling options vs buying and holding shares. One argument some people make is that in some cases an investor would be better off holding the shares of a stock or an ETF instead of just collecting premium on selling puts or calls. We’ll look at one example of a position we opened this week.
If you read my post from last week, you know that I was assigned on a put for MSTU and ended up having to purchase 100 shares at $8 a share. On Monday morning the share price was still a little below $8, but I was able to sell a call expiring next week for a premium of $35. During the week the price went up and down some and went as high as $9.00 and as low as $7.35. So someone could argue that I could have made more on selling the shares at a price higher than $8.35. ($8 plus $0.35 per share for the call premium)
This argument is true in this case. The thing is that we don’t really know what the share price will do during a given day or week. If the share price stayed below $8 I obviously would make more by selling the call and if need be rolling it over to another week to make additional premium if it expired below the strike price.
There are always instances where someone could say, “I could have made more if I had done …”. The nice thing about this options strategy is that when you collect premium you are guaranteed that money in your account. Now in many cases you do end up having to manage positions by rolling them or getting assigned and having to sell calls. But in most cases the position can be managed without a loss overall.
Week 10 Results
Here are the option positions I started the week off with:
I also was holding 100 shares of MSTU that I had been assigned on last week. As I mentioned earlier, I sold a call on Monday morning on my MSTU shares at an $8 strike expiring 7/11. I was able to collect $35 in premium for this. The share price of NMAX had gone up more so I felt comfortable leaving my put on NMAX for later in the week.
Since we had the Independence Day holiday on Friday this week, Thursday was expiration day. So on Thursday I opened a new position by selling a put on TSLL with a strike of $11 and an expiration of 7/11 (8 DTE). I was able to collect $45 in premium for this trade. The share price of NMAX was still well above my strike so I was able to let that one expire.
Here is a list of my trades and activity for the week:
Summary
I collected a total of $79.92 in premiums for the week which is just a little above my target at this point. For the first 10 weeks of this journey I have collected net premiums totaling $741.92. My target for premiums up to this point is $722.46. And here is a screenshot of my account at the end of the week:
As usual it still shows the expired put on NMAX which will drop off on Monday morning.
Read: How to Generate Consistent Returns Through Options Trading