Option Trades

Processed with VSCOcamAnd so, a quiet morning of a quiet June tuesday, with summer blossoming at full blast outside of the windows, Stalflare decided to take a leap and start a new trade…

Options.

Ok, I have been talking about it extensively, I have been training with my “paper account”, and to be honest with you I have already made 1 trade, “to see what effects it makes” (but it was a trade that was expiring in 4 hours)…

Anyhow, today was the day I have actually traded according to “some” strategy in my head. I have to thank Luca and ATL for their support and advices, clearly if I loose all my money I know where they live and it will be all their fault, if I actually make some cash it’s because I am superclever! (before someone links me to some Mafia family, I AM JOKING!) 🙂

Here are the trades that I have made, and the reasons why I made them:

(Close today: 10.15) Generali  – Sold 10.00 Put 7 July (13 Euro net)

At 10 Euro Generali is a steal, because of Brexit lost 16% in two days and touched 9.98, unfortunately I bought the option the day the stock was bouncing back, so it’s already 10.15 today. It might be a risky trade but I would have been happy buying the stock at 10 Euro and did not have the time to pass the order, so it makes sense to risk to be assigned in 1o days should markets still be overly depressed.

(Close today: 27.81) Cisco – Sold 27.00 Put  8 July (23.92 Usd net)

Been looking at Cisco for some time, 27 is a good entry point for me, a little expensive if executed but should grant a good yield (3.85%). Shame that I will miss dividend in July, but a bit like for Generali I wanted to start trading. Next trades will be more dividend and company reports oriented, to maximise profits/minimize risks.

(Close today: 177.60) Legal & General – Sold 170.00 Put  15 July (38.30 GBP net)

One of the hart hit stocks thanks to Brexit, lost more than 20% in 2 days. If executed I will happily buy at 170pence the stocks, I selected them because they have a very good balance sheet and a good amount of cash (reiterated by the president of the board today), the selloff is not really happening because of some fundamental gone wrong. Either way (assigned or not) I should be fine with the outcome.

(Close today: 27.88) Weyerhaeuser – Sold 25.00 Put  15 July (9.67 USD net)

Same story as for Cisco, I think it’s a very interesting stock, hugely diversified from the REITS that I have. 25 is my entry point, quite far from the money at this stage, but I believe that the Brexit effect will soon fade in the US and I do not think that the Fed will raise interest rates soon, which might affect adversely the price… If executed I am fine with keeping the stock, so no worries for now…

(Close today: 29.95) General Electric – Sold 26.00 Put 5 August (10.22 Usd net)

At 26 we are slightly lower my average price, it’s a great company heavily involved in the IOT, plus a gazillion of other businesses. I do not expect this put to be executed but if it does I am a buyer.

(Close today: 46.10) Wells Fargo – Bought 19 August Short Straddle 41/52.5 (57.84 USD net)

WFC has been under the water for some time, but it’s a great bank with a solid management. This is a bit of an hard play because I’d love not to be executed at all, but if I have to choose I’d love to have the covered call sold (for a modest profit). Right now I am in the middle of the straddle, I do not think/hope that the stock looses 10% more in 45 days (it’s down 15% YTD), but let’s see what happens then, if worse comes to the worst I buy back the put and take the loss…

(Close today: 18.90) Lagardere – Bought 19 August Short Straddle 18/23 (47.80 Euro net)

Lagardere is heavily under fire, -30% since the beginning of the year. It’s a cyclical stock, press, advertising but also leisure are involved. To see it at 18 we need to go back to the year 2011 (more or less). Sold the call at 23 for extra income, but here is the first mistake of this series, as I placed the order as a strategy (short straddle) and specified a desired price for both the options, the system executed the call at a very low price, lower than the commission… 😦 Need to be careful in the future… 23 is above my average price, so it’s a covered call. Shame that I didn’t get income out of it.. Anyhow I really do not believe that the stock can do more than 20% in 45 days.

Ok guys, fire away! What do you think?

 

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6 thoughts on “Option Trades

  1. Could we also share losses? :D:D:D:D:D:D

    Well it’s a “strong” start, but I was trying the past month on my paper account, and I wanted to get going… Might have picked a difficult moment, but what the hell! Let’s see how it goes… 😛

    Ciaociao

    Stal

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  2. ciao Stal!

    congrats for your first traded options 🙂 looks nice.
    a little advice: look at the bid-ask-spread and the transaction-costs.
    those two metrics can make you wealthy or not.

    i wish you the best!
    lets us go this journey together 🙂

    ciao
    Chri

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  3. Ciao Chris,

    Thanks for the post. Yes, I need to pay attention more carefully about the B/A spread and commissions, but these are the first mistakes, I can learn from them… My fear is when bigger mistakes will happen :D:D:D Anyways let’s see where I get to. Next step is to decide how many options I want to place every month, because I need to keep money aside and this require a bit of planning…
    Do you keep always all the cash needed to cover the puts in the account? Or you work on margin?

    ciaociao
    Stal

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  4. Ciao Stal,

    I work on margin. my most important metric is the available fund.
    i try to cover the puts with the available funds. if I get assigned, its no problem. I pay interest rates at my broker, and everything is oke.

    best regards

    Like

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