Last year, I started a theoretical options portfolio on this site that was aimed at traders and investors that were willing to take some risk. Overall, the portfolio has done quite well. Of the first three positions I closed, two put sales produced large credits, while one put sale produced a small gain.
When I started the portfolio, most of the positions were targeted at February or March expiration. Now that we are close to expiration for most of these positions, it is time to make some changes. For those that are new, here is the portfolio, before changes, and the starting prices of each position.
| Position | Date | Type | Strike | Action | Price |
| Apple (AAPL) | 7/20 | Put | $425 | Sell | $33.45 |
| Interdigital (IDCC) | 3/16 | Call | $55 | Buy | $4.80 |
| SPDR Gold Trust (GLD) | 2/17 | Put | $170 | Sell | $12.85 |
| Molycorp (MCP) | 3/16 | Call | $22.50 | Buy | $3.65 |
| Amazon (AMZN) | 7/20 | Put | $170 | Sell | $11.75 |
| Boston Beer (SAM) | 3/16 | Call | $100 | Buy | $6.20 |
| Visa (V) | 3/16 | Call | $95 | Buy | $6.30 |
The portfolio has done quite well in the last two weeks, thanks to Apple's continued rally and Visa's large gain after earnings. Here is the performance of each position since the last update two weeks ago.
| Symbol | 2/6 | 2/20 | Change |
| AAPL | $15.30 | $11.90 | $3.40 |
| IDCC | $0.10 | $0.05 | ($0.05) |
| GLD | $3.95 | $2.65 | $1.30 |
| MCP | $5.70 | $5.80 | $0.10 |
| AMZN | $11.25 | $11.45 | ($0.20) |
| SAM | $5.70 | $2.25 | ($3.45) |
| V | $12.60 | $20.10 | $7.50 |
Now if you notice above, the GLD put expired last Friday, so that position was closed out. The put was originally sold for $12.85, and was bought back at $2.65, producing a credit of $10.20 per contract that was traded. I am going to continue that trade, with the recommendation of selling the September expiration $170 put (expiration 9/22) for $12.05. I believe that gold is going to go higher, which will send this ETF higher.
Now, let's focus on the March expiration options. First, the Molycorp call. I'm currently holding the call at a $2.15 gain at $5.80 right now. I am going to continue to hold that position for now, probably until expiration. I expect the Interdigital call to expire worthless, resulting in a complete loss. I am currently down on the Boston Beer call, but I will continue to hold it through expiration.
The next change is going to be with the Visa position. I am going to sell the March expiration call for a gain of $13.80 per contract. That position worked quite well. I am not going to enter a new position in Visa at the moment. I want to get long again, but not at these prices. If Visa pulls back a little, I will start a new position in my next update in the portfolio.
Closing the Visa and GLD positions resulted in a gain of $24 per contract of each, which is a tremendous result in my opinion. Of the five positions I have closed, four have resulted in gains, and each of the gains is three times or more the size of the one loss. In total, per each contract traded as specified, the portfolio has produced about $50 of gains. I expect to take some small dollar losses on the Interdigital calls, which will be a 100% total loss. However, I expect the Molycorp call could make up for some or all of that, and there is still time to make money on the Boston Beer call.
As for the Amazon and Apple puts, I am not making any changes with those at this time. The Apple put, if sold now, would produce a gain of $21.55, which would be about 2/3 of the debit received at the start. The Amazon put is up just $0.30 currently, but I expect it will do better in the next few weeks.
I've done well with the portfolio and I expect the future to be productive as well. My next update will be closer to the March expiration date of 3/16. As I finish, I must remind you that this is a theoretical portfolio and that options trading has serious risks. You must always be aware of the short-term trading nature of these positions, and always check in on margin requirements before entering these positions. You must also have the capital required to either buy or sell one of these positions, should your options be called.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
