We have now completed 7 weeks of the journey in growing a $10,000 account using options trading. Up to this point things have gone relatively smoothly. We did have a loss in week 4 with WOLF, but as of this week most of that has been recovered. The goal is to continue on generating an average of 0.7% per week in options premiums.
Account Value Fluctuation
You’ll probably notice that the ending account value each week will fluctuate. This is due to the value of the open option positions. You’ll notice this week that even though we brought in additional premium, the value of the account didn’t change very much from last week. The reason is that a position I opened on Monday increased in value due to the share price of the underlying stock going down. This should be temporary as over time we will manage the positions until that value goes to zero.
You’ll find that in an extended market downturn that the account value will go down. In these cases we’ll end up using more of our available capital to achieve our target premium each week. But the account value will recover as the share prices recover over time.
Week 7 Results
Here are the positions that I started the week out with:
On Monday, both of these positions were comfortably out of the money so I would just leave these until Friday to see where things ended up. I opened a new position by selling a SERV put with an expiration of 6/20 at a strike price of $12.50. For this trade I was able to collect $90 in premium.
When Friday came around my SEDG put was far out of the money so I just let that one expire. TSLL had also moved up in price, so I decided to roll that position out another week and up to a strike price closer to the current price to get a better premium. I rolled the position out a week to an expiration date of 6/20 at a strike price of $12. For this I was able to collect an additional $43 in premium.
Summary
Bringing in $133 in premiums this week brought our account to the point where it has almost recovered the loss from WOLF that we had in week 4. The amount of net premiums that we have collected including the week with the loss for the first 7 weeks is $490.24. This includes the fees. Our target based on bringing in premiums of 0.7% per week up to this point is $500.40. So that means we’re only about $10 short of our target at this point.
Here is the chart showing our progress so far:
You may be wondering why the account balance didn’t increase from week 6 to week 7. The reason is that the account balance is offset by the value of the open positions. Because the share price of SERV went down after I sold the put on Monday, that increased the current value of that put which decreases the overall account value. Here is a screenshot showing the end of week account value and the open positions and their remaining value. You can ignore the position for SEDG since that expired at the end of the week.
So when you look at our initial deposit into the account of $10,000 and add the net premiums we’ve collected so far which is about $490. Then subtract the value of the open positions which is $215. The result would be $10,275. If the share price doesn’t recover to a price above our strike price by the end of next week, I’ll roll it out and if possible roll it down to a lower strike price.
Read: How to Generate Consistent Returns Through Options Trading