Rose Portfolio Options: Covered Puts And Calls - Nothing Naked

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Includes: ABBV, ABR, ADP, AMD, CVE, DEO, DLR, FTAI, INTC, KIM, KO, MA, OHI, OXY, RDS.B, SJM, SPG, T, TEVA, TGT, UNIT
by: RoseNose
Summary

Portfolio July options activity is explained with some really fantastic charts of my making.

There are 18 currently running different company options for the 93 stock portfolio, which are revealed with relevant dates and premiums.

There are 6 cash covered puts and 12 covered calls from many sectors out to February 2019.

I was assigned new shares of KIM through options which is also explained.

Shown and discussed is the completed July activity where I got to "Roll Up and Out" some call options to January.

My gosh, I never thought I would say "Roll Up and Out"!

I actually only figured out I had done it, after I did it, at least I think I did it.

To me it means I closed a current option by buying it back before expiration and then selling the same option again for a higher strike price or a “roll up” of the price...

...along with moving the expiration date out further or a “roll out” of the date.

Pretty simple, but to me I had never done it until Friday, July 20th, a big closing of options day for the market and it was eventful for me. I also need to thank The Fortune Teller for explaining “Roll Up and Out” at his service TWoF, or I would not have known that terminology at all. I love knowing the terms, but I have not ventured to other more complicated strategies as yet, which they make seem very simple. Time will tell if I can venture forth to do more. I will just stick with my simple covered calls and cash covered puts as I discuss what was done this past July.

July Completed Options

3 options were calls that I got to "roll up and out" and I will explain those.

2 calls of AMD and TGT were let to expire with the proceeds free and clear as originally done.

1 put of KIM was assigned or put to me, which I will explain the price for share calculations.

July options outcomes with some nice income received were just added to the portfolio value.

Abbreviations used in the chart seem fairly clear, but I will explain most as I was the one to design this fantastic chart:

Paid = The gain from the Prem = premium less fees. The trade fee is $5.67.

Pr/atw = Price of stock at the time or on the date of writing the option.

D-Writ = Date of writing the option.

Used only for a Put:

Days = The # of days in the option from the day written to expiration or end date.

Yield = Annualized yield. I use the premium/strike price for 100 shares x (365 (days in one year)/days in option). Just know this is not exact and does get me close enough to see if I like the option.

Date Cl = Date closed with buying the option back.

cost2c = The cost to close the option by buying it back.

New Net = Paid gain minus the cost2c is what I received for closing the option.

p/sh = Price per share for newly assigned shares less original premium and all fees incurred.

Ends Name Ticker Call Put Strike$ Prem Paid Pr/atw D-Writ Days Yield Action Date Cl cost2c New NET p/sh
7-20 Digital Realty Trust (DLR) C 115 1.6 154.33 103 3-22 roll up 1-18 7-20 97.67 56.66
Target (TGT) C 90 1.55 149.85 75.72 1-17 expired 149.85
Royal Dutch Shell (RDS.B) C 72.5 1.2 119.33 70.17 4-16 roll up 1-18 7-20 50.67 68.66
Kimco (KIM) P 17.5 2.17 211.35 16 1-26 180 25.1 $1,767.00 assigned 15.56
Diageo (DEO) C 150 1.14 108.33 145.43 6-12 roll up 1-18 7-20 69.67 38.66
Advanced Micro Devices (AMD) P 11 1.12 106.33 11.43 3-19 120 31 expired 106.33
7-27 Intel (INTC) C 52 1.1 104.33 52.08 7-25 expired 104.33

Back to “Roll Up and Out”

July 20th, 2018 was an options ending Friday and I did as follows:

1 - Digital Realty Trust

$115 strike price and it was selling for $115.50+ on that day. I do like owning DLR, but it is and was getting overpriced to me; however, I could see I could close this option and still make on it, so I did. My net on the deal went from over $150 down to $56, but a gain is a gain to me and I can still own the shares. I looked further out to see what I could do with a higher strike price.

The rest is history and I went with January 2019 with a strike price of $125 and got paid $233.33 net to do it. It is still advancing upwards in price, which means it could get called away early, but then time will tell. I will be pleased with $125 + premium = ~$127 for a sale price.

Below are the rest of my options for the year to aide you following this discussion:

Ends Name Ticker Call Put Strike $ Prem Gain Pr/atw D-Writ Days Yield
8-17 Occidental (OXY) C 90 1.51 145.33 85.8 6-4
Mastcard (MA) C 220 1.1 104.33 199.78 6-8
AbbVie (ABBV) P 92.5 4.15 409.32 90.31 7-19 30 53.8
Automatic Data (ADP) C 140 1.2 114.33 128.33 5-22
10-19 Simon Property (SPG) C 185 2.19 213.33 170.61 6-28
AT&T (T) P 32 1.53 147.33 31.61 7-19 90 18.7
11-16 Fortress Transportation (FTAI) P 20 2.1 204.34 18.5 8-2 100 37.2
2019
1-18 Teva (TEVA) P 22.5 4.05 399.85 21.6 8-4-17 515 12.6
Uniti (UNIT) C 20 1 94.33 18.56 5-3
Uniti (UNIT) C 20 1.1 104.33 18.56 5-3
Cenovus (CVE) P 10 1.55 149.33 9.28 6-15 210 26.9
Advanced Micro Devices AMD P 15 1.89 183.33 15.5 6-12 210 21.9
Digital Realty Trust DLR C 125 2.39 233.33 115.44 7-20
Omega Healthcare (OHI) x2 32 1.15 223.62 31.44 6-13
Omega Healthcare OHI x2 31 1.5 293.6 31.25 6-15
Arbor Realty (ABR) x4 10 0.55 212.17 10.17 6-19
Omega Healthcare OHI C 31 1.75 169.33 31.4 6-20
Omega Healthcare OHI C 32 1.35 129.33 31.88 6-26
Omega Healthcare OHI x2 31 1.5 293.6 31.3 6-19
J.M. Smucker (SJM) C 125 2.2 214.35 108.16 6-29
Omega Healthcare OHI C 32 1.42 136.33 32.03 7-6
Omega Healthcare OHI x5 33 1.01 496.45 32.04 7-6
Occidental OXY x2 92.5 2.26 445.61 85.35 7-9
Royal Dutch Shell RDS.B C 77.5 1.3 124.33 72.56 7-20
Diageo DEO C 160 2.5 244.33 150.86 7-20
2-15 Coca-Cola (KO) x2 48 1.06 205.62 46.4 8-3

More "roll up and out", I just love saying that, and I got to do it too!

2 - Royal Dutch Shell-B shares

This was also selling close to the option strike price and I bought the option back and sold another call. A girl, or anyone else for that matter, needs to have some fun, but I saw a chance to rock; or “Roll up and out” again. I will get more cash to sell these shares and at a higher price. I will just hang on to the shares either way it goes; I will be pleased.

3 - Diageo

$150.32 was the price of DEO on this day. I had a terrific profitable time rolling those others, so I looked at this one too! I will be pleased now to let these shares go for $160 + $2.50 premium received. Please note, I am actually getting more in the premium than I did the first time. I am learning and liking it all.

Assigned or Put shares

Kimco

I was assigned these shares for a $17.50 strike price and the cost of them is as follows:

$1,750 for 100 shares + $17 buyer fee = $1,767 cost, as shown above.

I was paid $211.35 for the option which now gives me $15.56 for the price/share.

Irony is that Kimco sold for ~$14 after I did this option and I just bought shares outright as well.

It is trading at ~$16 now. I will be keeping all of these shares.

A Miscellaneous call

Intel

It was an interesting thing I did July 25th while looking at selling some shares. I thought why not try for a higher price as it was trading at $52.08 at the time. I sold a call at the strike and ITM for $52 strike to last "just" 2 days ending on the 27th. This gave me income of $104.33 for 2 days. The shares are still mine and I watched while the share price collapsed. My intuition had been correct to consider selling some, but greediness intervened. There must be a reason, but I don't know it. Intel will be just fine in the long run and perhaps trimming was not meant to be. I am rather kind of pleased with the whole picture of this event.

The remainder of them are shown in the chart above which lists all current activity out to February 2019.

Roll Up and Out may occur again and I hope you will follow along with me on these option adventures. August could prove to be interesting.

Happy investing to you all with or without options.

Please know I am NOT an investment advisor nor do I want you or anyone else to do what I do. My articles are just informational only.

Disclosure: I am/we are long DLR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: all stocks in the charts for a total of 93, give or take a few.