Options Update: October 2019

My goal in 2019 is to collect $21,000 in options income and I'm very happy to report that I've achieved that goal with October's options income! Year to date, I've collected $21,541 in options income!

With two months to go, I'm wondering if my options income will exceed my dividend income goal of $25,200? That would be quite an achievement!

This month I'm reporting on one assignment and a multitude of income-generating trades.

Recap

Through the end of September 2019, I collected options income totaling $19,949 in 2019 at an average of about $2,217 per month. This was well ahead of my monthly target average of $1,750. 

Below is a snapshot of October's trades, which included an assignment, eleven expirations, three trades to close options early, four trades rolling forward options, and eight trades in which I sold new options for income.

(Click on image to enlarge)

Assigned Options

When the holder of an option exercises the option, it is said to be assigned.

#356 2019-06-21 : -1 × CSCO 18 Oct 2019 $52.50 P  $ 120.00  ( $ -1.10 )      

On 9 October, the option holder of the CSCO $52.50 put I'd sold decided to exercise the option. On that day, CSCO closed at $46.84 per share, some 11% below the strike price.

As a consequence of the assignment, I bought 100 shares of CSCO for $52.50 per share. Since I collected $120 for selling the option, my effective cost basis is $51.31. The buy adds $140 to DivGro's projected annual dividend income (PADI).

The buy doubles my CSCO position, which now has an average cost basis of $42.09 and an average yield on cost of 3.33%. CSCO currently yields 2.97% at $47.20 per share.

Expired Options

In October, the following option expired:

#383 2019-08-02 : -1 × XOM 18 Oct 2019 $67.50 P  $ 135.00  ( $ -0.80 )  
#382 2019-08-02 : -1 × VZ 18 Oct 2019 $52.50 P  $ 108.00  ( S -0.96 )    
#378 2019-07-25 : -2 × NKE 18 Oct 2019 $75.00 P  $ 124.00  ( $ -0.99 )      
#375 2019-07-25 : -1 × AAPL 18 Oct 2019 $180.00 P  $ 180.00  ( $ -0.65 )      
#371 2019-07-22 : -1 × TRV 18 Oct 2019 $155.00 C  $ 255.00  ( $ -0.35 )      
#370 2019-07-22 : -1 × DIS 18 Oct 2019 $145.00 C  $ 407.00  ( $ -0.80 )      
#364 2019-06-28 : -2 × PEP 18 Oct 2019 $110.00 P  $ 118.00  ( $ -0.99 )      
#347 2019-05-16 : -2 × GIS 18 Oct 2019 $47.50 P  $ 260.00  ( $ -1.60 )      
#346 2019-05-16 : -1 × AOS 18 Oct 2019 $45.00 P  $ 180.00  ( $ -1.10 )      
#345 2019-05-15 : -2 × WFC 18 Oct 2019 $42.50 P  $ 240.00  ( $ -1.00 )      
#342 2019-05-15 : -2 × QCOM 18 Oct 2019 $65.00 P  $ 156.00  ( $ -0.99 )      

I secured options income totaling $2,163 with these trades. 

Closed Options

When an out of the money option goes further out of the money, you can close the option early and secure most of the options income.

#357 2019-06-21 : -3 × GPS 17 Jan 2020 $20.00 C  $ 345.00  ( $ -111.72 )      
#302 2019-01-24 : -19 × F 17 Jan 2020 $10.00 C  $ 722.00  ( $ -238.39 )      
#301 2019-01-24 : -1 × F 17 Jan 2020 $10.00 C  $ 36.00  ( $ -13.32 )      

I decided to close my GPS and F positions as I'm no longer comfortable holding lower-quality stocks in my portfolio. You can read about these trades here and here. As a consequence, I closed the covered calls and secured $1,153 in options income in the process.

Rolled Options

Rolling forward options means buying back an option and selling another option with a later expiration date. You can do this to avoid options assignment for in the money options, or to collect more options income for out of the money options.

I rolled forward the following options this month:

#408 2019-10-18 : -2 × TSM 15 Jan 2021 $50.00 C  $    1,083.00  ( $            0.00 )      
#372 2019-07-22 : -2 × TSM 18 Oct 2019 $45.00 C  $       380.00  ( $      -946.30 ) → #408    
#407 2019-10-18 : -2 × TROW 20 Dec 2019 $115.00 C  $       339.00  ( $            0.00 )      
#320 2019-02-22 : -1 × TROW 18 Oct 2019 $110.00 C  $       220.00  ( $        -10.59 ) → #407    
#310 2019-02-20 : -1 × TROW 18 Oct 2019 $110.00 C  $       209.00  ( $        -10.59 ) → #407    
#406 2019-10-18 : -2 × TJX 17 Jan 2020 $65.00 C  $       188.00  ( $            0.00 )      
#319 2019-02-22 : -2 × TJX 18 Oct 2019 $60.00 C  $       130.00  ( $      -128.08 ) → #406    
#404 2019-10-01 : -1 × TJX 17 Apr 2020 $50.00 P  $       180.00  ( $          -0.30 )      
#278a 2018-12-06 : -1 × TJX 17 Jan 2020 $45.00 P  $       436.50  ( $        -36.29 ) → #404    

On 18 October, I noticed that TSM was trading just below $50 per share. Rather than chancing assignment, I rolled forward the $45 covered calls to the 15 January 2021, $50 strike price. Net of commissions, the trade generated $137 in options income, but it also cost me $566 in previously secured options income.

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Disclaimer: I'm not an investment professional or a licensed financial advisor. This article represents my personal views and decisions, which may not be appropriate for other investors. ...

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