Make Money Trading Monthly Options

This post is a continuation series about how to make money trading monthly options.  I share here what my trades are for this and previous month.  Also, I also discuss how much money I have made or loss and how I am managing positions.  Previous post haven’t really delved into my psychology behind trades and why which choices were made.  If you are curious, I cover this more below.  It may be helpful for you that are on the fence about can you do this yourself as well.  Nonetheless, what has become apparent to me is that our economic survival may hinge on knowing other ways to generate income besides a job.  A working knowledge and experience of how to trade options can help you tremendously today and in future.

Start Early

The sooner you start trading yourself, it will become clear you can leverage securities from 401K for cash-flow.  I digress for now on this subject, but if you are curious, you can read Don’t Drain Your 401K For A Pension Payment.  Below are last month’s post and previous positions taken by date:

Make Money Trading Options, $3370 This Month

You Have Options

Last Month’s Positions

Legend

• Gray – Highlighted gray implies a position in repair due to stock price being below original strike price I purchased the stock at.  Yet, I am still able to collect premium from covered call position
• Green – Highlighted green implies a position which I made some or all the money I intended to make
• Red – Highlighted red implies a position which I loss money

Covered Call

• 7/21 Sell 1 GDX AUG17 23 Call @ $.38
• 7/21 Sold 5 TWLO AUG17 30 Call @ $2.50
• 7/21 Bought 5 TWLO Jul17 30 Call @ $1.09 – rolled out
• 7/24 Sell 2 ACIA AUG17 50 Call @ $.90

Long Stock

• 7/22 Sold 200 MULE @ $25.00

Call

• 7/24 Bought 1 GILD AUG 4th 74 Call @ $1.59
• 8/4 Expired  GILD AUG 4th 74 Call @ $1.59 (expired worthless because GILD stock price was $73 at time of expiration.  It was below the $74 strike)

Secured Put

• 7/19 Sold 1 AAOI AUG17 85 Put @ $7.01
• 7/19 Sold 2 STMP AUG17 145 Put @ $8.30
• 7/19 Sold 2 CTRL AUG17 22.5 Put @ $1.50
• 7/27 Sold 2 CTRL AUG17 22.5 Put @ $1.35
• 8/3 Bought To Cover 2 STMP AUG17 145 Put @ $.47
• 8/3 Sold 2 STMP AUG17 145 Put @ $3.45
• 8/4 Bought To Cover 2 STMP AUG17 145 Put @ $1.50
• 8/4 Sold 1 TWLO AUG17 29 Put @ $1.84
• 8/4 Sold 1 BABA AUG17 152.50 Put @ $4.90
• 8/4 Sold 1 CPA AUG17 152.50 Put @ $4.10
• 8/8 Bought To Cover 1 BABA 152.50 @ $2.69
• 8/9 Sold 1 NVDA AUG17 150 Put @ $1.61
• 8/14 Bought To Cover 1 NVDA AUG17 150 Put @ $.11
• 8/15 Sold 1 BABA AUG17 155 Put @ $2.96
• 8/18 Bought To Cover 5 TWLO AUG17 30 Put @ $.08

Previous Positions Analysis

Last month, I was quite busy making trades.  Nice money can be made making directional calls because it earnings season.  If it goes the way you expect, you can close the position and get into another one.  STMP and BABA were two such trades.  Moreover, both reported earning and knocked the cover of the ball.  I was able to cover my original position and get back in twice on these stocks.  I collected additional premium as well.

Everything didn’t go so well this month because the GILD trade was a loser and the AAOI trade resulted in me being put the stock at $85.  AAOI is currently trading at $58.98.  I will be repairing this position until I get back to my cost basis or better.  MULE was sold for profit after called away at $25 a share.  In addition, the positions highlighted in green are winners.  This means they expired out of the money or was sold at profit.  I keep the premiums from the trade no matter what.  However if the price of the stock at expiration is at the strike price, I can be put the stock or have stock called away.  Those positions highlighted in gray are being repaired and will continue into this month’s positions.  Despite being repaired, I still successfully collected premium on these positions from a covered call.

This Month’s Positions

Here are the trades I entered for this month which are either a continuation of, a new, or a closed position.  Options will expire on the 3rd Friday in September, unless I close early, roll up, roll out, or roll up and out of a position(s).  Furthermore, I use the position taken in companies by their stock ticker symbol, i.e. ACIA.  If you want to know who these companies are, here’s the part you need to do a little research:

Long Stock

• 8/21 Sold 100 GDX @ $23.00
• 8/21 Bought 100 AAOI @ $85.00

Covered Call

• 8/21 Sold 2 ACIA SEP17 45 Call @ $1.35
• 8/21 Sold 1 AAOI SEP17 65 Call @ $2.10
• 8/21 Sold 5 TWLO SEP17 30 Call @ $1.09

Secured Put

• 8/21 Sold 1 LRCX SEP17 157.50 Put @ $4.60
• 8/21 Sold 1 NTES SEP17 272.5o Put @ $6.89
• 8/23 Sold 1 NTNX SEP17 22.50 Put @ $2.20

I was able to make money trading monthly options this month of $2369+ with these positions.

My Trade Psychology

Due to stock valuations being frothy in the market, I am a bit more risk off.  I took positions in some names which had been on a tear, but I have stepped down my number of positions in those.  For example, AAOI was up as high as $100 in July and  the P/E ratio was stretched.  So, I reduced my position size from 2 to 1.  From above, perhaps I shouldn’t have taken this position at all with the stock now at $58.

Yet, I think the stock can recover, but I’ll have to wait on it and repair the position I’m in now.  However, I have had several positions win, and those positions were taken in stocks with very attractive P/E ratio and growth prospects.  They were within historical P/E ratio range of stocks between 10 – 20.  As a result, these were stocks I was much more comfortable taking ownership in because the P/E ratio was not extended.  While I do still put on trades in stocks like BABA and NFLX whose valuations are rich, this is only because these names are a part of my long term portfolio.  So, I am comfortable owning at a strike price I chose.

The current positions I chose for this month is inline with that thinking to have stocks with P/E ratios under 20.  For example, LRCX has P/E of 18.  Also, NTES has P/E of 18.81.  I am positioning myself to be more risk off in positions I take without being out of the market.

In Closing

Finally, updates of trades I’m positioned in and how they have been working for me can be found here each month. These are currently the positions I’m working for options trades and I am doing pretty well, with hopes that a few of my positions, namely TWLO, AAOI, and ACIA, rebound slowly to what I originally paid for them, but in the meantime, I’ll sit back and collect premiums while I wait and continue to decrease my actual cost basis in these stocks.