Tag: FCEL

Picking Up Pennies In Front of a Steamroller: Covered Call on $FCEL

According to this article (which I found via googling, “picking up pennies in front of a steamroller”, so take it with a grain of asphalt…), “The term `picking up pennies in front of a steamroller’ is linked to Nassim Taleb, an acclaimed author on randomness and risk, whose books describe an investment strategy that has a high probability to yield a small return (pennies), and a small probability of a very large loss (steamroller).”

I didn’t look further into what specific types of investments Taleb wrote about, but one clear example, at least through the lens of this blog, is writing puts and calls in options trading. We are collecting “pennies” at high probabilities, but once in a blue moon the “steamroller” is going to sneak up on us. Will all the pennies be worth it? Well, that of course depends on how shiny those pennies are and how many you pick up.

Let me tell you about how I just got steamrolled by over $1,100 while picking up $55 worth of pennies. The steamroller was $FCEL. I opened a position on FuelCell Energy on October 8 by purchasing 100 shares at $2.34. I then went on to sell multiple covered calls over the next couple of months at the $2 and $2.50 strikes, proudly picking up $10 to $15 at a time. With a $234 initial investment, each of those premiums represented a 4-7% return!

Things were looking just fine until mid November when the stock price shot up, way past my strike price. The price eventually reached over $10 (and over $13 today)! Had I not had that covered call position at $2.50 strike expiring December 18, I would have been up almost $800. A 336% return! Instead, I got my $55 worth of premiums and $16 in capital gains… a ~30% return.

Lesson Learned?

Well, the short answer is no, I didn’t learn a lesson here. I am still selling covered calls on positions. There is one thing I might do differently with these types of positions in the future.

$FCEL was a pretty speculative play. In fact, my original covered call was an in the money call at the $2 strike. I expected to make about a 6% return after selling for a capital loss and be done with it. I didn’t know if it was going to go up, down or sideways.

In the future, if I’m in a similar speculative play, I could potentially participate in the upside by buying “protection”: buying a cheap, long call at a strike price way out of the money. This would make my covered call a call credit spread. For example, if I had bought a call at the $4 strike, it probably would have only cost me a couple bucks. Sure, my return if the contract expires out of the money would have been those couple dollars less, but I could then have participated in the upside a bit. In this case, if I had a long $4 Call position, that would have been worth over $600 when the stock rocketed up past $10!

Remember, as an option seller you are playing the part of the insurance company selling insurance (put writing), or in this case, the casino (call writing). Sometimes, the gambler is going to win big. That’s OK. In the end, however, the house always wins.

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

Using Options to Pay Off My Mortgage Early: Month 2

In my first month of using options trading profits to pay off my mortgage early, I earned a total of $152 and put $73 of that towards my mortgage principal. Over the life of the loan, that $73 is worth a total of $113. My goal as stated in my introduction post was to earn 1% of my initial $3,000 starting principal and put just $21 towards the mortgage principal. I was off to a great start, though my principal was down 16%.

I am very happy to report that my second month was even better than my first: $167 in profit! This is a 6.2% return on capital for the month of November (75% annualized).

Thanks to the overall market’s strong month, my long positions went up and I was able to completely reverse the 16% my principal was down. It is now at $3,240.86, which is 1.3% higher than the $3,200 I have added to the account thus far.

My positions & trades

$AAL, 109 shares at $13.98 ($1,523.73 total principal). Principal is currently up 2.3% ($34.97). I closed a total of four positions for a profit of $34. I currently have a $15 covered call position that I expect to collect another $34 from on New Year’s Eve.

$AAL November 2020 chart from StockCharts.com

$34 is a 2.4% return on my initial principal on American Airlines, well above my 1% goal each month, but much lower than the total portfolio’s returns of 6.2% for the month. The higher returns came from the other positions this month, but I’m happy to hold onto American Airlines for now. I think it will continue to move up and down with the COVID vaccine news, and I plan to ride that wave.

$FCEL, 100 shares at $2.34 ($233.78 total principal). At the close of November, Fuel Cell was trading at $10.18. That’s a 335% return! However, I sold a call option at $2.50, meaning my upside is limited to just $16, or less than 7%. Picking up pennies in front of a steam roller is a common metaphor used for selling options, and I think this is a perfect example of that. I plan to have a future post on this after it all shakes out. It will have a catchy title like, “How I missed out on $784.”

$FCEL November 2020 chart from StockCharts.com

As for the trades, I had a $2.50 call option that I collected $15 on due to expire on November 20. Rather than letting the shares be called away, I decided to roll the $2.50 to the next month for a net credit of $10 (the November contract was bought for $1.55 and the December contract was sold for $1.65). This is basically a guaranteed $10, or 4% return on the $250 principal I would collect if/when the shares are assigned. For me to lose money on this, the stock would have to retreat all the way back below my purchase price of $2.34. I am now so far in the money that I’m not sure I will be able to continue to roll the position for a profit. However, I will still try as long as I can get 2% or so.

$M, no open position. Macy’s is another stock that I missed some big upside gains on. However, I was able to milk it a little more than the $FCEL trade. I closed two trades for the month, netting me $54 on a position size of $617, which is an 8.8% return. When I finally had the shares called away at $6.50 on November 20, I profited $33 on the sale, but missed out on an additional ~$250 since the stock was then trading near $9. The stock is now above $10. I most likely won’t enter $M again unless there is a pullback.

$M November 2020 chart from StockCharts.com

$GPRO, no open stock position. Go Pro was my third position that was called away this month. I had 100 shares at $6.46, and the shares were called at $7 on November 6. You can see in the chart below that there was a big spike that I got caught in.

$GPRO November 2020 chart from StockCharts.com

In total I closed three trades for a net profit of $52. I currently have a $6.50 put due to expire this Friday, December 4. It is only an $8 credit, but that exceeds my 1% goal and was only a one-week contract. I expect to trade more cash-secured puts around the $6-$7 level going forward.

$APHA, no open stock position. Marijuana stocks are going nuts right now and option premiums are juicy. Aphria has been especially volatile due to a recently announced acquisition of Sweetwater Brewing Company. I currently have a $6.00 cash-secured put contract for December 11 that I collected a $17 credit on (2.8%). If I get assigned, I will sell a covered call in the $6.50-$7 range most likely.

$APHA November 2020 chart from StockCharts.com

Extra Mortgage Principal Paid

With $167 in net credits earned for the month, I am setting $53 aside for tax purposes. Last week I said I would be using $GNMA for my “tax escrow.” I have since been enlightened with the “The Ultimate Liquidity Portfolio” (ULP). I will have a forthcoming post on the idea as well as the book How to Stash that Cash by Chris Kawaja. In practice, the ULP can be implemented by putting 88% into intermediate term treasuries (e.g. $VGIT) and 12% in the US total stock market (e.g. $VTI). This puts my tax escrow account value at $99.82 as of this post.

So after taxes, I’m left with $114 that I decided to put directly towards my mortgage principal. With a combined $187 put towards my mortgage principal after two months, I will save $288 over the life of the loan.

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 to 0.4%. 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 losing to all three Benchmarks in my first month, I am now well ahead in all three. When considering 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 total value is at $3,356 after the month of November a 27.8% improvement over October. That beats Benchmark #1 (all savings) of $3167 by 6.0%, Benchmark #2 (extra mortgage payments) of $3,172 by 5.8% and Benchmark #3 ($SPY) of 2.2%. I’m pretty impressed that I managed to beat $SPY since November was the best month in the market in over 30 years.

I plan to put all these details onto my Using Options to Payoff My Mortgage Early page, including some tables and charts to show my progress from month to month. I’m still trying to format that so it’s easy to read, but hopefully I get that done before the end of the year!

Thanks for following along. I’m very happy with my progress, but it is just early days. Please don’t follow what I’m doing without doing your own research. Trading stocks and options can be risky. I hope you are inspired by these series of posts and my website to learn more about the strategies I am using to trade options and build wealth rather than attempting to follow blindly.

Using Options to Pay Off My Mortgage Early: Month 1

I have been looking forward to making this post since I wrote my introduction post earlier this month, stating my intention to pay down my mortgage principal early using extra monthly cashflow from recently refinancing our home to a lower interest rate. Rather than simply putting the money saved thanks to our new, reduced payment straight into the principal, I am investing the extra cash flow with options, and then using those profits to pay down the mortgage. You can read more about my general options trading strategy I will be using in this post.

I officially began this strategy on October 8. $SPY, the S&P 500 ETF, was trading at $350.10 at the time. It closed the month at $326.54, down 6.73%. Thanks to option trading, I was still able to generate premiums well in excess of my 1% monthly target. I was able to profit $152, representing a 4.9% return on my capital (that’s 78% annualized!).

As I wrote in my previous post, the difficult part of option trading is often preserving your capital. And my holdings were far from immune from the market pull-back. After taking my premiums out to pay down the loan and setting aside a portion for taxes, my portfolio value is actually down 12.9%. I am not concerned (yet, anyway) as my positions are still at a value that I can sell premiums (with covered calls) at strike prices that would still be profitable if I had to sell at expiration and still meet my 1% portfolio goal for the month. I actually already have open positions due to expire next month that will provide at least a 2% return. I will explain the details below.

My positions & trades

O.K., confession: I actually started this journey with an existing long position, rather than $3,000 in cash like I said I would. I had 68 shares of $AAL with an average price in the low $14.XX’s. Since I was already fairly close to a 100 share position (which is required to sell covered calls), I decided to just purchase the remaining 32 shares at $13.07. I actually bought another 9 shares later in the month at $12.31 per share, bringing my average price down to $13.98. Now I can sell covered calls at $14 knowing that if my option contract is exercised, I will get all of my principal back.

$AAL, 109 shares at $13.98 ($1,523.73 total principal). Principal is currently down 19.5% ($297.48). I closed a total of four positions for a profit of $63. I currently have a $14 covered call position that I opened for a $16 credit. After the big pullbacks last week I decided to open a put credit spread at $10.50/$10, taking in a $10 credit for a $50 risk.

After my $AAL position, I had about $1,500 in cash left to work with. I wanted to try to split this among at least two different positions for diversity sake. Rather than selling cash-secured puts to put my capital to work, I decided to purchase 100 shares of these stocks and then immediately sell covered calls on those positions. Honestly I’m not really sure why I decided to go this route. I must have been happy with the call premiums I could get at the time.

$M, 100 shares at $6.17 ($616.76 total principal). Principal is currently up 0.4% ($2.24). I closed one position for a profit of $26. I currently have a $6.50 covered call position that I opened for a $20 credit. Macy’s is pretty volatile right now, which is why I’m able to collect some solid premiums (that $20 credit is 3% of $6.50 for an 8-day long contract!).

$GPRO, 100 shares at $6.46 ($646 total principal). Principal is currently down 8.0% ($52). I closed a total of three positions for a profit of $33. I currently have a $7 covered call position that I opened for a $17 credit. Implied volatility is great on this stock as well, giving me an opportunity to likely sell another intra-month contract at a profitable level (strike price of $6.50+).

$FCEL, 100 shares at $2.34 ($233.78). Principal is currently down 14.4% ($33.78). I closed a total of two positions for a profit of $30. I currently have a $2.50 covered call position that I opened for a $15 credit. I had a couple hundred dollars left and decided to be a bit more risky. Fuel Cell is an alternative energy play from way back in the .COM days (it’s all-time high is almost $7,000 per share!). Both of the positions I closed were actually in-the-money calls ($2 strike price) that I closed because most of the value of the contract was gone once the stock price dipped. If this contract expires out of the money, I will probably look to sell another in-the-money call if I can guarantee a profit (e.g. if I sell a call at $2, it needs to be worth more than $34 to be a guaranteed profit at expiration).

Extra Mortgage Principal Paid

With $152 in net credits earned for the month, I am setting $47 aside for tax purposes. I am currently using $GNMA as my tax escrow account, so I bought $47 worth of it. $GNMA is an ETF that holds mortgage-back securities issued by the government and currently yields about 2%. It is a pretty stable ETF and I feel better about setting this cash aside for next year in something that will earn a bit of interest rather than sitting on the sidelines.

So after tax, I’m left with $105. I have decided to take $73 of that total to put directly toward my mortgage principal. That $73 puts me 254% ahead of my goal for the month and will amount to $113 savings in interest over the life of the loan. It’s a great start!

Why didn’t I use the entire $105? Since my principal had such large paper losses this month, I decided to keep a bit of that cash in my portfolio. I came up with $73 by balancing the difference between my starting principal, deposits, premiums earned, stocks purchased and the tax I’ve set aside.

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 to 0.5%. For comparison this month, I will stick to 0.6%. Benchmark #2 is putting all of those savings straight into extra monthly payments. This one will probably be the hardest to “beat”, but the funds are the most illiquid, which is important to me at this point in my life. Finally, Benchmark #3 is simply buying $SPY.

So how did I do this month? On paper, it doesn’t look so good. If you take my paper losses on my stock positions, add the extra principal payment I made, cash remaining in my portfolio, my $3,000 is actually down to $2,576.41. Had I put the $3,000 into my savings account, it would now be worth $3,001.50. If I had put the $3,000 into my mortgage principal, I actually wouldn’t have gained anything yet since it hasn’t compounded, so it would still only be worth $3,000. Had I bought $SPY, that $3,000 would now by just $2,798.11.

So I’m actually down 14.2% to Benchmark #1 (savings), 14.1% to Benchmark #2 (extra mortgage payments) and 7.9% to the S&P 500. Currently, putting everything into a savings account is the winner! But that will definitely change.

So here is where I rationalize my performance this month. First, a big portion of my paper losses come from those 68 shares of $AAL I had bought months ago that were already down more than 10% when I got started. That alone makes the difference in my performance deficit to the $SPY. The $73 I put towards my mortgage principal hasn’t had any time to compound yet, so that will start to grow and grow, quickly closing the gap to Benchmark #2.

Overall I am still quite optimistic and excited to see where I continue to stack up against these benchmarks. Looking forward to another month of options trading!

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.