I was expecting a possibly volatile week with 4 of the MAG 7 companies reporting earnings and the tariff deadlines looming at the end of the week. My expectations were met to some degree as we did have some volatility throughout the week.
As you’ll see, with this options strategy it isn’t so much about trying to avoid starting a position with a strike price that has a high probability of staying out of the money. Instead, I try and maximize the premiums and then knowing best how to manage positions when they do end up in the money.
I find that if the position ends up a solid amount in the money during expiration week, I do best to roll the position by Tuesday or Wednesday to avoid assignment. This works in most cases. If the put is in the money by less than 5% I can typically wait until Friday and still avoid being assigned. It’s certainly not an exact science, but the more experience you get with it, the easier it gets to know when to roll. Even then, you may roll a position and then the share price sometimes goes up by the end of the week and ends up that you didn’t need to roll.
Week 14 Results
Here are the positions that I started the week out with:
On Monday morning TMC was at a comfortable level. OSCR had dropped a little below my strike, but I decided to wait and see how the week went with it.
I opened a new position on Monday by selling a put on RUN with a strike price of $10.50 and an expiration date of 8/8. (11 DTE) For this trade I was able to collect $61 in premium to get my week started.
As the week progressed the market struggled a bit and by Wednesday my OSCR and TMC positions were enough in the money that I thought it would be a good idea to go ahead and roll them. I rolled the TMC put out one week for the same strike price and collected $10. My hope is that this would give me some extra time for the share price to hopefully recover some. I also rolled OSCR out one week, but I was able to roll it down to a $14 strike. The reason for this is that OSCR is reporting earnings next week so the volatility was higher for next week’s expiration. For this roll I collected a premium of $20.
On Friday the market took a fairly sizeable downturn for most stocks. So as you’ll see from our end of week snapshot, the value of our existing positions is fairly high. This in turn lowers the overall account value for the week. But my goal is to manage these positions until they end up being able to expire out of the money. One plus is that after hours on Friday the price of TMC shot up which will help our put for next week. Here is a list of all of our trades for the month of July:
To see a list of all of my trades through the end of last week for this account, I have a list in last weeks update article: Week 13 Update.
Summary
For week 14 I was able to collect $90.80 in net premiums. The target for week 14 is $76.64. My total net premiums collected for the first 14 weeks is $1,127.36. My target for the first 14 weeks is $1,025.86. This puts me ahead enough that if I run into a week that I make below my target, I’ll still be ahead.
I did end the week using a little higher percentage of my account as collateral for my open positions. This is because I wasn’t able to let any positions expire because of the drop in share prices, but I’m still only using $4,350 as collateral for my puts. Below are snapshots of our weekly progress as well as the account value and positions for the end of the week.
Read: How to Generate Consistent Profits Through Options Trading