Tag: F

Using Options to Pay Off My Mortgage Early: Month 9

Despite finding lots of opportunities to collect premium in June, the month ended up being my worst on record thus far. The reason? I played a meme stock incorrectly. Specifically, $AMC. More details on that to follow, but first an update on the numbers…

I collected $230 in premiums, just shy of my previous record of $232.90 from March. Capital in my trading account reduced by $502 or -11.7%! As you will see below, this came about from that one bad trade and is a cautionary tale of the risk of destruction of capital when buying long option positions.

My positions & trades

Note: these summaries were written several weeks ago, but this post has sat unfinished in my drafts for a while

$AAL, 100 shares at $13.98 average ($1,398 total principal). As of the 1st of the month, my principal in American Airlines is up 51.7% ($723), however I am capped at a $402 gain due to a $18 strike covered call position expiring August 20 (I’ve already rolled it forward from July expiration to August for this month). I continue to be able to roll it forward for about a $20 profit, which meets my 1% goal. Since this is a classic covered call and not a PMCC, I plan to continue rolling this until I can’t collect a reasonable credit any longer.

$AMC, no current positions. So here is where everything went wrong! At the beginning of the month of June, $AMC started shooting up. When it was in the mid to upper $20’s, I decided to BUY an out of the money put at the $20 strike for August 20. I figured this was all nonsense and this would give me over two months to be right. Well unfortunately it continued up and the value of my long put tanked. I held the position for a while, but ultimately closed it for a $400+ loss in July (so technically the sale doesn’t belong in my June recap post) (also note, I wrote this recap on August ~11th, before it started to pullback into the $30s!).

To reduce the sting however, I did sell various puts that were essentially calendar spreads at the $20 strike that were shorter days to expiration than my long put due in August. For example, I sold the June 18 $20 strike put. Those added up to be $107.

While most people agree AMC is overvalued to say the least, I learned that it is difficult to play the direction correctly on these meme stocks. I think it is better to sell premium and most often with protection, like with credit spreads or perhaps even iron condors. I am trying this, for example, on $SPCE below.

$BB, no current positions. This was another meme stock trade and more in line with how I think it is best to trade these stocks. I sold a $9 strike cash-secured put with 17 days til expiration. I collected a $13 premium which would be an annualized return of 29% for a .05 delta put! I closed the trade after just a few days because I was profitable and the stock was moving against me. I was essentially wrong about the direction of the trade, but was right on the change in volatility. Had the stock continued to go up and not down, I likely would have held a bit longer and to squeeze out a bit more premium.

$GE, 1x LEAP January 21, 2022 $5 Strike Call at a cost of $6.55; 1x July 23 $12.50 Covered Call. Nothing too exciting here. I rolled my June expiration covered call forward to July for a net credit of $20, which is a 2.7% return (26.3% annualized). GE has been hovering in this $12.50 to $14 range. Since my long leg is now less than 6 months until expiration, I am considering letting this expire in the money and allow the LEAP to be called away.

$F, 1x LEAP January 21, 2022 $10 Strike Call at a cost of $5.65; 1x July 30 $12.50 Covered Call. I like trading Ford options because there is a ton of liquidity. I actually sold my short leg initially ITM at $15 when it was trading in the $15.50 range. This proved to be the right call as we’ve seen a strong pull back in Ford. I wish I had gone with a longer expiration on the LEAP of at least 12 months. We will see how this turns out.

I did roll my initial ITM covered call from June to July expiration when the stock dropped near my $15 strike. There is always an increase in premium when this happens and I’ve found it to be a good time to roll out if possible. I earned $22 profit on the first trade (It was actually $87 but because I sold this one ITM I am doing some financial engineering to make my LEAP at an actual cost of $500. This way if I get assigned on my $15 strike, I don’t need to count the LEAP being called away at $5 as a loss.).

$SNDL, 100 shares at $1.58 average ($158 total principal); 1x $1.50 July 16 covered call. Judging by the current share price of under $1, this is looking like a pretty poor trade. However, I have been able to grab $7 to $8 credits each month for selling at $1.50 strike. This

$SPCE, 1x $25/$20 Strike August 20 Put Credit Spread. After my little AMC debacle I wanted revenge! But didn’t want to dig myself a bigger hole, either. As mentioned above, I think credit spreads may be the best way to go about these meme stock trades. My reasons are defined risk (equal to the risk of the spread, i.e., $500 on this position) and the long position is a hedge against the possibility of increased volatility. Just when you think the implied volatility for these type of stocks can’t go any higher, and you’re tempted to open a short option position, things get even crazier and you can be left way underwater on the position, even if you aren’t actually in the money. The long position helps limit this because while the short leg is increasing in value, so too is your long leg, albeit not by quite as much. I opened this position for a credit of $50, which would be a nice 10% gain! However, I will likely close the position if I can get a 50% gain or so.

Extra Mortgage Principal Paid

In June I began to have some real changes of heart in terms of how I was going about paying down this mortgage. While I am not shying away from the idea of paying off mortgage debt, I clearly feel that there are better ways to go about this rather than just paying extra principal every month. My results thus far speak for themselves, as I’m up over a $1000 pursuing my current strategies rather than just chucking away my extra cashflow towards the mortgage principal (“Benchmark #2”).

Recall that my latest idea was to put 1% of my monthly option trading profits towards the mortgage. Anything over would go towards buying preferred stocks or “Hedgefundie’s Excellent Adventure.” But even that 1% seemed like too much. Surely this can be optimized further. (even if that comes at the cost of complexity, which I clearly don’t have any aversion to!) Enter Cash Flow Index…

As I’m writing this I’m realizing all this belongs in its own post (or series of posts), so I will get straight to the point. Cash Flow Index is a way of quantifying the efficiency of a debt.

CFI = (Loan Balance) / (Monthly Payment)

If the debt is large but only requires a small monthly payment (like the early stages of a mortgage), it is efficient and has a high CFI. Conversely, if the debt is relatively small but requires a larger debt payment (like the late stages of a mortgage), it is less efficient and therefore might make more sense to pay off. The longer the amortization schedule, the more efficient. A 5 year car loan? Not so efficient. I like CFI because it balances out some of the effects of interest rates and duration of the loan on your debt payment.

My CFI for my mortgage after June’s payment was 230.1 ($503,051 / $2,186 = 230.1).

With that in mind, I’m toying with ways of incorporating that into my extra mortgage payments. For the month of June, I decided to divide the principal balance in my trading account by the CFI. This came out to about $19 ($4,310.44/230.1 = $18.73). As I get closer to paying off the mortgage, the amount that will go towards the principal will accelerate. 230.1^-1 is 0.43% (5.2% yearly). When the CFI is down to 100, which currently is month 243, that would mean 1% monthly will go towards the principal.

My preferred stock portfolio paid $1.72 in dividends and I “withdrew” $1 from my new risk parity portfolio (formerly Hedgefundie… read below), for a total of $21.72 towards mortgage. I have now paid an additional $445.14 towards the mortgage principal, which will save $678.06 in interest over the life of the loan.

The portfolio formerly known as “Hedgefundie’s Excellent Adventure”

I decided to switch my Hedgefundie strategy to a more classic risk parity style portfolio. Risk parity portfolios use a mixture of equities, bonds, gold, commodities, CEFs, REITs, etc. Depending on the mixture, they can often have equity-like returns with much lower volatility. More on this to come in another post, but for now I’m using a mixture that heavily weights equities and uses leverage. Just not quite as much as Hedgefundie’s Excellent Adventure! I plan to take a 4% yearly withdrawal (i.e., 1/300th of the portfolio value each month) to go towards the mortgage principal. However, I’m still making deposits from my option trading so I will reduce that deposit net of the required 4% withdrawal for the month. At the end of the month the portfolio was at $267.16. I just rounded the net withdrawal up to $1.

Benchmark Comparisons

In my introduction post I identified three different benchmarks I will be comparing my performance to. Benchmark #1 is putting all of my savings from my refinance, plus a 1 month skipped mortgage payment, into a savings account. When I wrote that post I was actually getting 0.6% APY, but it has reduced twice down to just 0.3% now. Benchmark #2 is putting all of those savings straight into extra monthly payments to the mortgage principal. Finally, Benchmark #3 is simply buying $SPY.

After 9 months I have invested $4,313.68 (initial $3,000 + $164.21 per month). Benchmark #1 is at $4,322.85, Benchmark #2 is at $4,388.79, Benchmark #3 is at $5,197.40. My actual total is at $5,335.53. June was my first month since month #1 that had a negative return. Total return is now at $1,021.85, or 23.7% (32.8% CAGR). My returns include the value of my principal in my trading account + the monthly contribution of $64.21 and interest into my savings + the difference between the original loan and what is actually remaining this month. My results are beating Benchmark #1 by 23.4%, #2 by 21.6% and #3 by 2.7%.

Update 2: Creating my own Ford dividend

It’s been two months since my last update on my covered call strategy on $F while I wait for a dividend to be reinstated. As outlined in my first post, the ~6% dividend Ford was offering in 2019 was the primary reason I started accumulating shares. With the COVID “crash” in March the dividends were “suspended” while the company stabilized. That was probably the correct move for the company’s longterm future, but that doesn’t mean I didn’t miss those quarterly payments!

With that in mind, I started selling covered calls at strike prices above my average price to generate some income on that tied up capital I had in Ford. As the share price has rebounded, I have found myself in the money on my positions, but I have still been able to roll them out for an acceptable rate of return.

As of my last update, I had two February 19 covered calls, one at $9 strike and $10 strike. I had taken in $67 in credits before commissions. $F is now trading in the mid-$11s. Since then, I have been able to roll both of those out to March for another credit.

On January 22, I rolled the $9 covered call out to March 19 for a net credit of $16.68. This is a 1.9% return over 57 days, which is 11.9% annualized. With that credit, I bought one additional share for $11.47. This is similar to a DRIP (Dividend Reinvestment Program) with a traditional dividend.

On February 2, I was able to roll the $10 covered call out to March 19 expiration for a net credit of $31.68. This is a 3.2% return of 46 days, which is 25.1% annualized! As of now, I haven’t reinvested that credit and have just kept the cash.

This brings the total net credits from selling covered calls to over $115. At a current share price of $11.58, that’s a return of 5% over the course of about 3 months.

These positions, especially the $9 strike, are sitting pretty far in the money at this point. This means that there is very little extrinsic value remaining in these contracts, which means sooner or later I will choose to let it expire at have the shares called away. Fortunately, I have more than 200 shares of $F that I’ve own for more than 1 year, so my gains on those shares will be taxed at longterm capital gains if I’m forced to sell when they’re called away (to be clear: all the credits I’m receiving for selling the covered calls are taxed as ordinary income, unfortunately). If the stock price sees a pullback down below $11 again, I will look at rolling these out again as it’s likely there will be some more extrinsic value again. As long as I can get a 1% net credit for rolling out between 1 to 2 months, I think it will still be worthwhile as that’s a 6-12% annual return that, I feel, is pretty low risk.

I do expect Ford to resume the dividend at some point, so it would be nice if I could continue to roll out until then. But if Ford continues to climb higher and I get further and further in the money, that becomes increasingly unlikely. Either way, I will continue to update the blog with what happens.

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Disclaimer: I am long $F. I am not a financial advisor. This is not investment advice. Please do your own research before investing in anything discussed herein.

Update: Creating my own Ford dividend

Here’s my update on Ford’s dividend: they’re still not giving one!

Since writing my post about creating my own dividend while I wait for Ford to resume theirs, I’ve done just that by selling covered calls on the position I already have in Ford. I have more than 200 shares currently, so I’ve been able to sell two contracts at a time.

Since writing that post, $F price went from $8.80s to almost $9.50 and now has pulled back down to nearly $9 again. We all know volatility is great for options sellers!

Here are the trades I’ve made and the current positions I have open:

Prior to writing that post, I actually had two open covered call positions on $F, one that was right at the money at $9 due to expire on November 20. Rather than risking the shares being called away, I closed that position and sold the December 24 $9.50 Call for a net credit of $.11. $.11 may not sound like a lot, but if that was a dividend payment, it would be the equivalent of an 11.5% yield! I used that credit to buy 1 share of $F for $9.00.

I had another $9 Covered Call position for December 18. I rolled that one out to January 15, this time keeping the $9 strike price. I took in a net credit of $.16 that time (11.9% annualized yield). Again, I reinvested that net credit by purchasing one share of $F at $9.10.

On December 3, I rolled the December 24 $9.50 out again to January 8 for a net credit of $.11 (10.7% annualized yield). I purchased one more $F at $9.26 with the credit.

On December 9, I rolled the January 15 $9 Covered Call (which is now pretty well in the money at this point), out to February 19 for a net credit of $.21 (11.3% annualized yield). I then purchased two $F at $9.43 with the credit. It’s unlikely $F will come down below $9 by February, but I will continue to roll this one out for as long as possible.

As the price of $F continued to tick up, I decided I wanted to try to roll out and up this time. I took that $9.50 January 15 covered call and rolled it out to February 19 for a net credit of $.08 (7.9% annualized yield). Since I didn’t get enough in credit for this one to buy another share of $F, I just pocketed the cash. However, it puts me in a great position to start selling covered calls at the $10 or higher strike price in the future.

Overall, I have taken in $67 of credits, less commissions, by doing this strategy over a fairly short time period. Let’s say that $67 was the quarterly yield amount for holding 200 shares of $F at the current trading price of $9.03, that would be equivalent to a dividend rate of 14.8% ($67 * 4 / (200 * $9.03) = 14.8%)!

Risks

I always want to be mindful of what risks I am taking. 14.8% yield sounds pretty good for a savings account, but of course, this isn’t in an FDIC account. This is real money that could be lost. With that said, before beginning options trading, I was OK with the risk of holding $F, at that point, because I thought the reward of the dividend payments and maybe some modest growth was worth it. In that case, I have no more risk than I had prior to selling these covered calls.

On the other hand, I have limited my upside potential. This isn’t a risk per se, but may make the risk I am taking less worth it. Some argue that option selling is the wrong kind of asymmetric risk… limited upside and unlimited downside (although in this case, the downside actually is limited because the stock can’t go below $0, but you get the point). To that, I would ask them would you rather be casino or the gambler? I’ll pick playing the casino every time. In addition, I’ve demonstrated that sometimes you are able to roll positions up to allow for even more upside from the stock. This is often an option so long as the stock hasn’t had an incredible run up in a short amount of time. And if it has, since I have been reinvesting my credits back into the stock, I still get to participate somewhat in that upside.

Conclusion

I do hope that Ford chooses to reinstate its dividend in 2021. There is still lots of chatter over at SeekingAlpha on when that might occur. However, as long as I am able to continue to roll out and, hopefully, up, I won’t be missing it much!

When will Ford resume its dividend? I’m creating my own while I wait

Almost immediately after the COVID-19 pandemic struck, Ford announced that it suspended its dividend. This was unfortunate news for me since I had been accumulating shares over the previous 6 months, having been allured by the 6%+ yield Ford was providing at the time in this yield-starved world we continue to find ourselves in. After wetting my lips with a couple tasty quarterly dividend payments (which I reinvested), the stock tanked from the $12 range to a 52-week low of $3.96 on March 23. I accumulated a few more shares here and there to lower my cost-basis, but without the promise of a dividend, my thesis on the company was broken. I wasn’t in it for the growth potential after all (most car companies that don’t end in “ESLA” have limited growth potential, in my opinion), I just wanted that dividend!

But then the stock started creeping back up as car sales proved to not go to zero as many feared during the varying levels of shutdowns we have seen throughout the US. Around this time I began trading options and immediately found an opportunity here with Ford. I began writing cash-secured puts below the market, using premiums earned to purchase shares and continue to lower my cost-basis, following the stock steady move up past $6, $7 and now $8. With my cost-basis now at $8.86, I’m nearly back to even with the stock closing at $8.75 at the close on Tuesday, November 17. I now find myself at a point where I can’t lower my cost-basis further by buying shares at the market price and I’m not interested in investing more capital, especially while there is still no dividend on offer. I still think there is a bit more upside to the stock, however, so I’m also not interested in selling at this point.

Creating my own dividend

I read this article on Seeking Alpha and was inspired to write this post. Rather than sitting on my hands while I hope that Ford resumes their dividend, I will be selling covered calls instead, essentially creating my own dividend. With my cost-basis at $8.86, I can now sell covered-calls at any strike price from $9 and above and still guarantee a profit in the event the shares get called away. I plan to sell the calls at least one strike price above the current trading price, as long as the premium I receive is above that 6% annual yield I was initially after. I would also like the credit I receive, less fees, to be more than the current trading price so that I can reinvest the credit just like I would with a standard DRIP.

Below is a table of credits I could receive for selling calls at various strike prices and expiration dates. These credits are subject to market conditions, so they change constantly. However, they generally move up or down in unison, so I find this to be helpful in comparing my different covered call options.

With these data points known, I’m leaning towards selling the December 11 $9.50 call.

Downsides

Like any options trading strategy, there are risks and downsides associated. I’m going to briefly review some of them.

Stock drops

If the share price drops, I get to keep the credit I received up front, but my underlying shares of $F will have gone down. I got a return on my investment, but my principal is now diminished. I get to sell another call after expiration, hopefully at a still-attractive strike price/credit. This is still a risk even if I had not sold a call option and I was just waiting patiently for my dividend.

Shares get called away

If the shares go above my strike price, the shares will get called away at the strike price. Again I get to keep the credit I received up front AND I sell the shares for a profit since I picked a strike price above my cost-basis. If $F rips several dollars higher than my strike price, then I will have some FOMO for not getting to participate in the full upside. Such is the plight of option sellers.

Taxes

Besides losing some of the potential upside by writing a covered call, I am also increasing my taxable income with every option contract sold. I am doing these trades in a taxable account. If Ford was still paying a dividend, I would be collecting qualified dividends and therefore only being taxed as a capital gain (which 15% for my income bracket). Credits from option trading, however, are taxed as ordinary income (over 30%). While this is a factor to consider, I would rather pay taxes on income that I wouldn’t have had otherwise.

Weekly Options Trading Review: October 5 through October 9, 2020

Closed 7 trades for $45.31 profit (100% win rate). Opened 22 trades.

Closing Previous Weeks’ Trades (Positions closed that were opened previous to this week)

  • SLV Put Credit Spread (October 16, 2020 $19/18 @ +$.06 Credit)
    • Contracts: 1
    • Max Profit: $6
    • Collateral: $100
    • Max Loss: $94
    • Opened: September 21, 2020
    • Closed: October 5, 2020
    • P/L: +$2 ($0 commissions with Robinhood)
    • Return on Capital: 2% (49% Annualized)
    • I picked this one up after looking over Option Alpha’s stock scanner. I was literally my first couple days into options trading (funny how long ago just a couple weeks ago seems now…) and was trying to get my Level 3 options trading approval through Robinhood. I read online that once you’ve done ~10 trades you are more likely to be approved for Level 3. Since I was still Level 2 when I placed this trade, I couldn’t actually submit this as a single spread order. First I sold, essentially, a cash-secured put (at $19) and, once that was filled, immediately bought the $1 spread (at $18) to limit my risk. I was left with just a $6 credit on an ~80% probability trade… not a good risk/reward situation! Decided to finally close this to take that $94 risk off the table.
  • SPY Put Credit Spread (October 5, 2020 $335/334 @ +$.28)
    • Max Profit: $28
    • Collateral: $100
    • Max Loss: $78
    • Opened: October 1, 2020
    • Closed: October 5, 2020
    • P/L: +$4 ($0 commissions with Robinhood)
    • Return on Capital: 4% (292% annualized)
    • From last week’s opening trade: This is my second attempt at reducing a potential loss by selling the opposite trade, effectively making an iron condor. Option Alpha recommends this rather than cutting losses by selling the initial, losing trade (in this case the $341/342 Calls that ended up being profitable thanks again to the dip from the president’s COVID-19 results).
      In the end, this one worked out for me because SPY opened up on Monday morning. Had I let this expire at the end of the day, I would have kept the entire $28 premium, but since I was basically 50/50 at that point whether I’d make $28 or lose $72, it made sense to close for just the $4 gain.
  • F Cash-Secured Put (October 16, 2020 $6 @ +$.08)
    • Max Profit: $8
    • Collateral: $600
    • Max Loss: $592
    • Opened: September 16, 2020
    • Closed: October 16, 2020
    • P/L: +$5.33 (After commissions)
    • Return on Capital: .9% (15.4% annualized)
    • I am long F in this account with 200+ shares with a cost-basis of ~$8.80. Prior to learning about options, I’ve been lowering that cost-basis by slowly buying more shares. Going to be using cash-secured puts (and covered calls) to hopefully turn this one into a winner going forward.
  • AAL Call Credit Spread (October 16, 2020 $14/14.5 @ +$.13)
    • Max Profit: $13
    • Collateral: $50
    • Max Loss: $37
    • Opened: September 28, 2020
    • Closed: October 6, 2020
    • P/L: +$6 ($0 commissions with Robinhood)
    • Return on Capital: 12% (487% annualized)
    • As mentioned last week, I have held a long position in AAL since it tanked due to the COVID-19 pandemic. I have a comfortable feel for the stock’s recent range now and I will continue to sell calls and puts when the premiums make sense. This trade was triggered when the position fell into my 50% profit target range when President Trump tweeted that congress needs to sideline stimulus package talks until after his Supreme Court nominee is confirmed. Thanks for the volatility, Donald!
  • ANF Put Credit Spread (November 20, 2020 $13/12 @ +$.35)
    • Max Profit: $35
    • Collateral: $100
    • Max Loss: $65
    • Opened: September 29, 2020
    • Closed: October 6, 2020
    • P/L: +$15 ($0 commissions with Robinhood)
    • Return on Capital: 15% (684% annualized)
    • TL;DR: My wife was right! From last week’s opening trade: This might sound crazy, but my wife says she has seen lots of “influencers” on social media sporting Abercrombie lately. She thinks it’s going to be a “cool” brand again. I took a look at the premiums available, and they make sense from a risk-reward-probability  perspective, so I pulled the trigger. That’s one of the things I love about options trading is that for a small amount of capital, you can make speculative trades that are still high probability of success regardless of whether the stock moves much at all AND have defined risk.
  • GPRO Cash-Secured Put (October 9, 2020 $5 @ +$.50)
    • Max Profit: $50
    • Collateral: $500
    • Max Loss: $450
    • Opened: October 1, 2020
    • Closed: October 6, 2020
    • P/L: +$26.68 (after commissions)
    • Return on Capital: 5.3% (325% annualized)
    • From last week’s opening trade: After successfully closing last week’s short put on GPRO, decided to do another one. If I get assigned, I will sell calls at probably $5. If I don’t, I will probably buy a few shares of GPRO essentially “for free.”
      Stock took off, so pocketed ~1/2 the premium and bought a few more shares.
  • GE Put Credit Spread* (October 9, 2020 $6.5/6 @ +$.05)
    • Max Profit: $5*
    • Collateral: $650
    • Max Loss: $50
    • Opened: September 18, 2020
    • Closed: October 9, 2020
    • P/L: +$17.99 (after commissions)
    • Return on Capital: 2.8% (46% annualized)
    • This trade was my first attempt at a credit spread, but I wasn’t approved for spreads by my broker yet! So I made my own by selling the $6.50 put and buying the $6 put. GE was struggling around $6.20 for most of the time I had these contracts, but decided I’d be OK getting assigned on this one so I sold my long put for $14, which is the majority of the profit from this trade. GE jumped up the last few days before expiration as well.

Weekly Roundtrip Trades (Positions opened and closed within the week)

I had no roundtrip trades this week. This is because I currently have many at a paper-loss, and those that are winners, are generally balancing out my losers (e.g. losing on a bearish call credit spread, but winning on a bullish put credit spread). I have

Opening Trades

  • SPY Call Credit Spread (November 6, 2020 $351/352 @ +$.34)
    • Max Profit: $34
    • Collateral: $100
    • Max Loss: $66
    • Opened: October 5, 2020
    • This is part of an ongoing strategy I am working on that, in my notes at least, I’m referring to as “ETF Challenger” (it’s a working title, OK!). There are several other trades below that are all part of this strategy, so I’m not going to comment on each one. As my experience grows and I refine the strategy, I will more formally document it, but the idea is to challenge the market when it makes a large move up or down, which is about 1%. I then sell puts or calls at the ~.30 delta, if the premium is high enough. I think I got a little carried away with this in this week, but I chalk it up to learning!
  • UNM Cash-Secured Put (November 20, 2020 20 @ +$2.30)
    • Max Profit: $230
    • Collateral: $2000
    • Max Loss: $1,770
    • Opened: October 5, 2020
    • This is an IRA trade on a stock I’m very interested in going long on. I don’t intend to keep a full 100 shares, assuming I get assigned, but will put some of the premium I earn into buying the shares and then use covered calls to get my initial $2,000 principal back.
  • QQQ Call Credit Spread (November 6, 2020 $295/294 @ +$.33)
    • Max Profit: $33
    • Collateral: $100
    • Max Loss: $67
    • Opened: October 5, 2020
    • See SPY “ETF Challenger” comments above
  • F Cash-Secured Put (October 23, 2020 $7 @ +$.20)
    • Max Profit: $20
    • Collateral: $700
    • Max Loss: $680
    • Opened: October 6, 2020
    • I’m starting to warm up to the idea of more cash-secured puts (and covered calls). As I said last week, I’m already long Ford at an average price of $8.80ish. At $7 I’d be willing to add to the position. Will immediately be selling covered calls on this if it gets filled.
  • GPRO Cash-Secured Put (October 16, 2020 $5 @ +.18)
    • Max Profit: $18
    • Collateral: $500
    • Max Loss: $482
    • Opened: October 6, 2020
    • Go Pro has been super hot this week, so premiums are pretty good. The stock is now trading in the $6, so very unlikely this will be challenged again at $5. Will probably let it go until expiration next week.
  • SLV Put Credit Spread (November 6, 2020 $20.5/20 @ +$.14)
    • Max Profit: $14
    • Collateral: $50
    • Max Loss: $36
    • Opened: October 6, 2020
    • This one fits in with my “ETF Challenger” plan. Tuesday afternoon had lots of stocks taking a big dip after the previously mentioned Trump tweet. I tried to jump on the opportunity and put out lots of trades, but had trouble getting fills. This is one that did.
  • UNG Put Credit Spread (November 6, 2020 $10/9 @ +$.25)
    • Max Profit: $25
    • Collateral: $25
    • Max Loss: $25
    • Opened: October 6, 2020
    • See SLV above
  • SLV Put Credit Spread (November 6, 2020 $20.5/19.5 @ +$.27)
    • Max Profit: $27
    • Collateral: $100
    • Max Loss: $73
    • Opened: October 6, 2020
    • Same trade as SLV above, but in a different account with a slightly larger spread.
  • IWM Call Credit Spread (November 13, 2020 $166/167 @+$.35)
    • Max Profit: $35
    • Collateral: $100
    • Max Loss: $65
    • Opened: October 7, 2020
    • The market opened big on Wednesday after Trump essentially said, “JK.” As a result, lots of opportunities for “ETF Challenger.” Probably ended up with too many of essentially the exact same position (bearish on the overall market), which will mean either some big wins or big losses. Still learning here, so going to see how it plays out for now.
  • SPY Call Credit Spread (November 9, 2020 $352/353 @ +$.34)
    • Max Profit: $34
    • Collateral: $100
    • Max Loss: $66
    • Opened: October 7, 2020
    • “ETF Challenger”, as above.
  • QQQ Call Credit Spread (November 9, 2020 $295/296 @ +$.33)
    • Max Profit: $33
    • Collateral: $100
    • Max Loss: $67
    • Opened: October 7, 2020
    • “ETF Challenger”, as above.
  • AAL Call Credit Spread (November 20, 2020 $15/16 @ +$.25)
    • Max Profit: $25
    • Collateral: $100
    • Max Loss: $75
    • Opened: October 7, 2020
    • This trade actually gives me an iron condor on the November 20 expiration with a nice wide range from $9 to $15. Assuming AAL stays within this range, I will probably try to close both positions with one order for a combined ~50% of max profit.
  • DIA Call Credit Spread (November 13, 2020 $293/294 @ +$.33)
    • Max Profit: $33
    • Collateral: $100
    • Max Loss: $67
    • Opened: October 7, 2020
    • “ETF Challenger”, as above.
  • SPY Call Credit Spread (November 9, 2020 $352/353 @ +$.38)
    • Max Profit: $38
    • Collateral: $100
    • Max Loss: $62
    • Opened: October 7, 2020
    • “ETF Challenger”, as above. Actually identical to one of the above trades, but in a different trading account that was able to get filled at a really good premium of $.38.
  • BAC Cash-Secured Put (October 16, 2020 $25 @ +$.60)
    • Max Profit: $60
    • Collateral: $2,500
    • Max Loss: $2,440.67
    • Opened: October 8, 2020
    • I’m looking to get some financial exposure in our IRA account (it’s currently pretty tech heavy), and Bank of America is a stock I’d like to own at $25. Will probably accumulate shares with premiums, and if I get assigned, sell covered calls because I’m not sure we want $2,500 of that portfolio tied up in one stock (unless that money is being put to work with covered calls!).
  • SKT Cash-Secured Put (November 20, 2020 $6 @ +$.32)
    • Max Profit: $31.33
    • Collateral: $600
    • Max Loss: $568.67
    • Opened: October 8, 2020
    • Also an IRA trade. I’m a sucker for a high-yield REIT. This one has been beaten down by COVD-19, down 55% YTD, and for good reason. Tanger operates high end shopping malls! So this is speculative and, if I end up with shares, hoping that dividend gets going again soon. Also a decent premium for such a cheap stock (because volatility!).
  • AAL Covered Call (October 23, 2020 $14.50 @ +$.44)
    • Max Profit: $44
    • Collateral: $1413
    • Max Loss: $1369
    • Opened: October 8, 2020
    • These next four trades are part of my mortgage pay down strategy. You can read my introductory post here. I will have more updates regarding my specific strategy in the future, but essentially it is using extra cash flow, thanks to a refinance, on building a small portfolio concentrating on cash-secured puts and covered calls, and then paying down the mortgage with the premiums generated.
  • M Covered Call (October 30, 2020 $6.50 @ +$.29)
    • Max Profit: $29
    • Collateral: $617
    • Max Loss: $588
    • Opened: October 8, 2020
    • Mortgage pay down strategy.
  • GPRO Covered Call (October 23, 2020 $6.50 @ +$.31)
    • Max Profit: $29
    • Collateral: $646
    • Max Loss: $615
    • Opened: October 8, 2020
    • Mortgage pay down strategy.
  • FCEL Covered Call (October 16, 2020 $2 @ +$.41)
    • Max Profit: $7
    • Collateral: $234
    • Max Loss: $193
    • Opened: October 8, 2020
    • Mortgage pay down strategy. But this one is a little different because it is deep in the money, below my purchase price of $2.34. FCEL is from the dot-com bubble (checkout the historical chart — an all-time high of $7,731 back in September of 2000 and an all-time low of $0.13 last year!), so this one can go all over the place. It’s a small position, so worth the risk I think ($7 in 8 days on a $234 investment is 124% annualized return!).
  • RKT Put Credit Spread (November 20, 2020 $19/18 @ +$.26)
    • Max Profit: $26
    • Collateral: $100
    • Max Loss: $74
    • Opened: October 8, 2020
    • New mortgages are at all-time highs because of the housing and refinance markets, and Rocket is one of the biggest players these days. I feel good about this one holding above the $19 mark.