Changing it up
I started 2016 with a new strategy in mind which focuses on supporting my monthly cash flow goal with dividend paying stocks. I’m slowly moving myself into a few stocks and it’ll continue to grow over the next few years.
Part of the reason I’m adjusting my overall strategy is a realization that my first two years of options trading wasn’t as successful as I had hoped. I completely expected a fairly tough learning curve, but the application of my learning wasn’t as spectacular as I had hoped.
So, what I’m doing is building out a base of dividend paying stocks which will be augmented by the income generated from options trading. I haven’t quite figured out all the details, but I plan to roll some percentage of my success from options trading into stock/ETF purchases.
This should allow me to more quickly speed up the growth of the dividend paying base and support a quicker move towards my goal of $5,000/month income.
It all sounds good in theory, but we’ll see how I do with execution! That always seems to be the tricky part for me.
As for my options trades this month, it really wasn’t too bad. One of the wayward trades you’ll notice in the chart below is a long call on CLF I bought. This was a holdover from late 2015, however I don’t record my trades until they close, so that’s why you see it here.
I honestly think i’m done with buying options. I’ve had a smattering of success, but nothing I could really build a sound strategy around.
Another feature I’ve added to the chart below is annotating when I’ve rolled a trade. I’ve noted this with a -R and a number to capture which roll it is. So, if I’ve rolled a TRN covered call for three months you’ll see CC-R3 to show that trade is the third roll.
I’ve learned quite a bit about managing trades in the past few months and as promised in my 2015 annual report, I’ll roll everything I’ve learned (with sources) into a single post so you can learn too.
This year, I’ve also switched from watching a handful of stocks to using a watchlist that can be found on Dough.com. I’ll talk a little more about this resource in another post, but it’s definitely worth your time and I know at least one of the other Naked Options Trader readers uses it.
Well, that’s about it for February!
I hope your trading is going well and I’d love to hear from y’all. Feel free to drop me an email at email@example.com, leave a comment on the site or catch me on Twitter @optionstudent.
Until next month!
February Net Option Trading Income: -$10
February Dividend Income: $1.75
Total February Income: -$8.25
Total 2016 Net Income: -$60.43
Current Dividend Stock/ETFs Holdings
|Stock/ETF||# Shares||Quarterly/Monthly Dividend Per Share||Annual Dividend Per Share||Cost Basis||Yield|
|JNK||10||$.189 (monthly avg)||$2.27||$33.95||6.68%|
February Dividend Payments
|Stock/ETF||Total Dividend Paid|
February’s Option Trades
|Strategy||Stock/ETF||Option||Entry Price||Exit Price||Commission||Net Profit||% Gain/Loss||# Lots|
|Long Call||CLF||Apr 16 $1 Call||$1.49||$.96||-$10.09||-$63.09||-35.57%||1|
|CSP||CHK||Feb 16 $4 Put||$.62||$2.08||-$10.09||-$156.09||-235.48%||1|
|CSP||CNX||Apr 16 $7 Put||$1.44||$.74||-$10.09||$59.91||48.61%||1|
|CSP||CLF||Mar 16 $1 Put||$.15||$.04||-$5.43||$49.57||73.33%||5|
|CC||TRN||Feb 16 $21 Call||$.40||$1.25||-$10.10||-$95.10||-212.50%||1|
|CC-R1||TRN||Mar 16 $21 Call||$1.80||$.07||-$5.10||$167.90||96.11%||1|
|CSP||USO||Mar 16 $7.5 Put||$.60||$.23||-$10.10||$26.90||61.67%||1|
CC = Covered Call
CSP = Cash Secured Put
-Rx = Roll #X from previous trade