August Naked Puts Options Trades Yielded About 16% In Options Premiums Annualized

Small and large investors in dividend stocks and ETFs can use covered calls and puts trades to generate monthly income from options premiums and options trading.

By Donald E. L. Johnson

Cautious Speculator

• August puts options trades yield 15.98% annualized.

• Six of 16 puts trades were assigned.

• I’ve sold covered calls on the assigned stocks.

• Four of the 16 equities that I sold puts on in August are up in the last month.

August cash secured puts trades yielded 15.98% annualized in options premiums income.

Six of 16 puts trades were assigned.

It was a rough month for these stocks and ETFs. Only four of the equities are up over the last month. They include Williams-Sonoma (WSM), Exxon Mobil Corp. (XOM), S&P 500 Energy Sector SPDR (XLE) and Dow Inc. (DOW).

On August 23, I posted this comment:

8.23.14. Williams Snoma (WSM) reported lower earnings and revenues and lowered guidance.

After the report, the stock soared more than $14.

I bought back my WSM 8.25.23 $121 puts for $0.10 per share. This reduced my premium income to $0.65 a share and left me with a 0.469% RoR, or 12.226% ARoR.

I don't know why the stock is up or where it is going. I just know that I no longer want to own it at $121 now.

Since then, despite lowering its guidance for the year, WSM is up apparently because it beat analysts’ estimates. It’s a 96% buy on Barchart.com. When a company is forecasting poor results for the next year with higher operating margins, I don’t want to own it regardless of what the technicals and analysts are saying. The outlook for retailers is mixed, at best, with high interest rates and the possibility that job-killing high interest rates may go higher before they top out.

QQQ is down 3.9% in the last month, and it was assigned at $368 a share, or $36,800 per 100-share puts options contract. I sold weekly expiration covered calls on it twice after it was assigned and had it called at a $1.60 per share net profit after collecting puts and calls options premiums.

I also sold September covered calls on the other assigned stocks. They include D.R. Horton (DHI), Intuitive Surgical (ISRG), JPM Equity Premium ETF (JEPI), Newmont Mining Corp. (NEM) and Paycom Software Inc. (PAYC). I’ll report on those trades in a future post.

Last week I sold September expiration puts on Danaher Corp. (DHR), Kraft Heinz Co. (KHC), Merck & Co. (MRK), Moderna Inc. (MRNA), NEM. Vertex Pharmaceuticals Inc. (VRTX) and XLE. I’ll report on those trades in a future post.

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Beware. Like all investing, trading stocks and options is risky. I’m an active private speculator who trades covered calls and sells puts on stocks for my accounts. I am not a professional analyst nor a financial advisor. I don't take and won't take responsibility for how other people trade. This article is for educational purposes only. It is not advice. The data presented looked accurate at publication time except for intra-day fluctuations, but I can’t guarantee the accuracy. Traders should do their due diligence. I reserve the right to trade any of the listed stocks and options at any time. I receive no compensation for producing this content nor for any links.