October 2023 Cash Secured Puts Trades Update #2

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

By Donald E. L. Johnson

Cautious Speculator

• October puts sales generated annualized options premiums income of 11.722%

• Four of the 19 puts trades were assigned at discounted prices.

• Doing a lot of small trade each month diversifies the risks that naked puts trades will be assigned, or sold to the puts sellers.

October cash secured puts trades generated an average of 11.722% in annualized returns on risk.

I try to update readers on my trades a few times each month so readers can get a feel for how I trade over time and how the trades work out.

Please click on images and zoom in for better views.

The 19 options trades involved 1 exchange traded fund and 12 dividend stocks. ARoR assumes similar trades will get similar results an average of every 22 days on an average of 20 trades a year.

Doing as many small trades a month as possible diversifies the risks of writing cash secured puts options and having stocks assigned, or sold to you. I took assignments on one ETF and three stocks. They were Dow Inc. (DOW), JPM Equity Premium Income ETF (JEPI), Pfizer Inc. (PFE) and Verizon Communications Inc. (VZ).

These puts were sold with the expectation that they would be sold to me at the margins of safety, or discounts from the equities’ prices at the time the trades were done. Puts options are assigned when they expire with the prices of the underlying ETFs and stocks below the puts options strike prices.

When stocks are bought at discounts, annual dividend rates are a bit higher than they were when the trades were done.

This table shows how the October puts stocks performed in October. VZ was up 9.23%. Microsoft Corp (MSFT) was up 9.6%. Vertex Pharmaceutical (VRTX) gained 6.21%. Visa (V) rose 3.79%, Laboratory Corp of America (LH) rose 1.44% and Newmont Mining Corp. (NEM) rose 0.87%.

Danaher Corp. (DHR) lost 23.42% after spinning off Veralto Corp (VLTO). Both stocks dropped after the spin off.

Caterpillar (CAT) fell 15.08%, Exxon Mobil (XOM) fell 10.15%, PFE fell 8.02%, Intuitive Surgical Inc. (ISRG) fell 7.475, DOW fell 6.5%, Zimmer Biomet Holdings (ZBH) fell 6.37% and JEPI was off 1.55%.

There were no realized gains or losses on these trades during October.

In September the ARoR was 14.607% on 19 trades that involved 3 exchange traded funds and 16 stocks.

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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.