ETF Covered Calls » Expiry Update

October 2008 Expiry Update

RichSlick — Sun, 19 Oct 2008 19:00:16 +0000

Here’s an update on my current positions.

Arbitrage Account:

Own 400 XHB @ cost of $22.72 : XHB closed at $14.30 (position at -$3,368.00) : Cash Flow $2,058 Note: I own 400 shares of XHB with 4 contracts for Dec $23 strike option sold.
Own 400 DDM at cost of $74.30 : DDM closed at $34.80 (position at -$15,800.00) : Options Cash Flow $685.00
~~Own 500 DUG~~ at cost of $43.50 : DUG closed at $52.60 (position assigned at $42) : Options Cash flow $3,451.00 Note: Position will close at $42.00 for an anticipated loss of $750.00
YTD Options Cash Flow: $7,435.00

Mini Account:

Own 200 DDM at $77.80 : DDM closed at $34.80 (position at -$8,600) : Options Cash Flow $2,502.00
Bought 100 UYG at $10.08 and sold October $10 call : Assigned at $10.00 to rake in $80.00
YTD Options Cash Flow $2,315.00

Power Account:

Own 500 DDM at $71.95 : DDM closed at $34.80 (position at -$18,575) : Options Cash Flow $1,100.00
Own 400 OIH at $109.17 : OIH closed at $90.00 (position at -$7,688 ) : Options Cash Flow $2,545.00
Own 400 SSO at $65.65 : SSO closed at $30.80 (position at -$13,940) : Options Cash Flow $1,335.00
YTD Options Cash Flow: $13,622.50

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September 2008 Expiry Update

RichSlick — Sun, 21 Sep 2008 15:34:48 +0000

Here’s an update on my current positions.

Arbitrage Account:

Own ~~800~~ 400 XHB @ cost of $22.72 (400 @ $22.72, ~~400 @ $19.80~~) : XHB closed at $22.33 (position at -$156.00) : Cash Flow $2,058 Note: 400 shares of XHB have been assigned at $20.00 so profit of $80 comes in as 400 were purchased at $19.80 and assigned at $20. I still own 400 shares of XHB with 4 contracts for Dec $23 strike option sold.
Own 400 DDM at cost of $74.30 : DDM closed at $60.08 (position at -$5,688) : Options Cash Flow $685.00
Own 500 DUG at cost of $43.50 : DUG closed at $35.19 (position at -$4,155) : Options Cash flow $2,141.00

Mini Account:

Own 200 DDM at $77.80 : DDM closed at $60.08 (position at -$3,544) : Options Cash Flow $2,502.00

Power Account:

Own 500 DDM at $71.95 : DDM closed at $60.08 (position at -$4,105) : Options Cash Flow $1,100.00
~~Own 200 QID at $46.75~~ : QID closed at $47.78 : Options Cash Flow $926.00
Own 400 SSO at $65.65 : SSO closed at $57.29 (position at -$3,344) : Options Cash Flow $1,335.00
~~Own 500 SDS at $64.00~~ : SDS closed at $66.60 : Options Cash Flow $1,947.00

QID sold at $45.00 (options assigned) originally bought at $46.74 (-$348 loss + $926.00 options profit = $578), SDS sold at $64 (options assigned). Approx. 50k cash.

August 2008 Options Expiry Update

RichSlick — Sun, 17 Aug 2008 15:00:01 +0000

Here’s an update on my current positions. I hope I captured all the cash flow right below.

Arbitrage Account:

Own 800 XHB @ average cost of $21.26 (400 @ $22.72, 400 @ $19.80) : XHB closed at $19.26 (position at -$1,600) : Cash Flow $2,058
Own 400 DDM at cost of $74.30 : DDM closed at $63.74 (position at -$4,224) : Cash Flow $685.00

Mini Account:

Own 200 DDM at $77.80 : DDM closed at $63.74 (position at -$2,812) : Cash Flow $2,502.00

Power Account:

Own 500 DDM at $71.95 : DDM closed at $63.74 (position at -$4,105) : Cash Flow $1,100.00
Own 200 QID at $46.75 : QID closed at $38.63 (position at -$1,624): Cash Flow $926.00
Own 400 SSO at $65.65 : SSO closed at $63.00 (position at -$1,060) : Cash Flow $1,335.00
Own 500 SDS at $64.00 : SDS closed at $63.80 (position at -$100) : Cash Flow $461.00

Options Expiry Update July 2008

RichSlick — Sun, 20 Jul 2008 15:00:55 +0000

Arbitrage Account:

Own 800 XHB @ average cost of $21.26 (400 @ $22.72, 400 @ $19.80) : XHB closed at $17.01 (position at -$3,400)
Own 400 DDM at cost of $74.30 : DDM closed at $62.35 (position at -$4,780)

Mini Account:

Own 200 DDM at $77.80 : DDM closed at $62.35 (position at -$3,090)

Power Account:

Own 500 DDM at $71.95 : DDM closed at $62.35 (position at -$4,800)
Own 200 QID at $46.75 : QID closed at $45.25 (position at -$300)
Own 200 SSO at $66.30 : SSO closed at $59.37 (position at -$1,386)
Sold 2 SSOGO for $2.00, these options expired worthless
Sold 2 SSOSM for $1.65, these naked puts will be assigned and I’ve been assigned 200 SSO at $65.00
Sold 2 SUCTC for $2.80, these naked puts will expire/assign during August expiry (August $55.00 Strikes)

So the potential for profits here are in SSO, DDM and QID for August (or later) expiry. SSO August $65 calls are trading for $0.60 or about 1% return in under 28 days. DDM October $72 strikes are selling for $1.40 or about 2% return in 3 months. QID August $47 strikes are trading at $2.20 or 4.5% in under 30 days. Profit opportunities are not quite ideal except on QID so I’ll hold until better opportunities surface.

A Word On Paper Losses

RichSlick — Sat, 07 Jun 2008 15:31:24 +0000

Lately, more and more people have expressed concerned about the down turn in markets and the viability of continued profits through ETF Covered Calls and I think too many people are missing the point. Here’s what my aggregate portfolio looks like right now:

Arbitrage Account:

Own 800 XHB @ average cost of $21.26 (400@22.72, 400@19.80) current XHB @ $18.81 for paper loss of -$1,960.00
Own 400 DDM at cost of $74.30. Current DDM is at $70.86 for a paper loss of -$1,376.00

Mini Account:

Own 200 DDM at $77.80, DDM is at $70.86 for a paper loss of -$1,393.00

Power Account:

Own 1000 DXD at $60.61, DXD at $56.05 for a paper loss of -$4,360.00
Own 200 QID at $46.75, QID at $38.78 for a paper loss of -$1,592.00

These losses don’t include any profits made by shorting but if you add only the losses all up, it adds up to a little over $10,600 in paper losses. Am I in a panic about it? No, because markets don’t move up in a straight line just like they don’t move down in a straight line. Corrections will happen periodically and the point of the ETF Covered Call strategy is to be quasi long and short along the way to profit from the short periods.

Right now, I am VERY tempted to add more to my XHB positions (XHB July $19 strikes are trading at 5.8% premium right now) as well as go heavily into DDM as the Dow will inevitably pop sometime between Monday and a point in the future. What is that point in the future? I don’t know, it may be a week, or a month or a year but I know it will correct and pop back up. We have two more weeks before June Expiry and anything can happen during that two week period.

Lastly, if you have short term needs for the money you’re investing, DO NOT USE those funds for this trading strategy as market downturns can happen rapidly and unexpectedly.

When Covered Call Options Convert to Non Standard Options

RichSlick — Thu, 01 May 2008 07:12:21 +0000

I’d been traveling again and I failed to notice that my OIHER call options had undergone a change. I figured I’d write about it since I’ve been asked this question before in the past.

If you read the news, you might have heard that National Oilwell has acquired Grant PrideCo and these two companies were components of the Oil Holders Trust (OIH). I had sold two contracts on OIH for May expiry so now those options have changed from OIHER to OKVER. Essentially what has happened in the transaction was that a dividend was paid out for each 100 shares of OIH so that “excess” money has to be accounted for somewhere in the options record and thus you have the adjustment.

Nothing bad will come of this except it becomes interesting to keep track of the options should you choose to close out your position. Oh yeah, I just raked in another $416.00 with this ETF. For more details, you can read about it here.

Options Expiry Update

RichSlick — Fri, 18 Apr 2008 18:24:52 +0000

Today is options expiry so let’s review some transactions for the month of April that ended with today’s expiry.

In the Power Funds Account:

Bought 200 QID (Short QQQ) @ $46.74 and Sold 2 QIDDU (April $47 Strikes) for $1.20 to earn 2.5% return. As of close of business today, QID will likely close below strike price so my options will expired worthless.

Plan of action: Sell 2 more contracts for May $47 strikes or July $47 strikes.

In the Mini Funds Account:

Bought 200 DDM (Double Long Dow) @ $74.60 and Sold 2 DDMDW (April $75 strikes) for $2.05 to earn 2.65% return. As of close of business today, DDM will likely close above strike price so my options will be assigned and I’ll be in 100% cash.

Plan of Action: Look for opportunities, perhaps XHB or SSO.

In the Arbitrage Account:

Bought 400 XHB (Home Builders) @ $22.72 and Sold 4 XXJDW for $0.70 to earn 3% return. As of close of business today, XHB will likely close above strike so my options will be assigned and I’ll be in cash.

Plan of Action: Look for opportunities, perhaps XHB or SSO.

There were other transactions conducted during April however those will be impacted by May 16th expiry. I will run the ETF-Cashinator later in the evening tonight to generate a list of opportunities. Tune in tonight .