Options Trading Income Report – May 2016

Total May Income
Total 2016 Net Income

Slow and steady…

May was another “up” month. Definitely not as dramatic as April, but I’ll take a win any day!

I closed four trades with only a single loser for the month. I sold covered calls on both CLF and TRN with no intent of rolling either trade if they were close to closing ITM. Apparently the market gods believed I already received too much torture over these two stocks and allowed me to close them OTM.

Just as a little side note, I’ve made my peace with both of these stocks and will continue to sell covered calls against them until they are called away. I think I’ve finally hit the “acceptance” point in grieving my losses on these two and am willing to part with them when the market gods deem fit…though it won’t keep me from trading them in the future!

I also traded a very unexciting put against Alcoa (AA) since it had relatively high volatility at the time. I closed it out near my 50% target, but only walked away with about $12 in profit.

I’m sure some of you are thinking, “Why even make the trade?” Honestly, I thought about not making this trade, but I was feeling stagnant in the market and wanted to get in an additional trade for the month.

So, on to the loser for the month…JC Penny (JCP). I initially sold a put against it on 5/29 unknowingly right before a significant drop in the stock (click here to see the chart).

Of course I didn’t know the drop was coming, but I did know that if it dropped it would likely fall to around $7 and hang out around there. As you can see from the chart it promptly did exactly that.

Why sell the put then? Here was my thought process going into the trade.

I would sell the put for a bit of a credit ($.41) which would lower my break even on the trade to $8.62, taking into account a $3 commission. If the trade were to break through my strike price (which it did), I would then roll it out in time (which I did). At which point I would collect an additional credit, lower my break even point even lower and then be able to sell the $8 call against the stock if assigned.

This is where my plan ran into a bit of a bump. When I looked at the available options to roll my trade to, only August options provided enough of a credit to make it worth my while. Honestly, I’m not sure why July options weren’t showing in the ThinkorSwim platform, though I’m sure this is a lack of understanding on my part and a point for further education.

Anyway, this got me thinking along the lines of my original options trading thesis of treating them like a rental property versus a stock and continually moving into and out of the stocks. To this end I have a few trades on which will put to the test this theory of moving in and out of stocks.

In my growth as a trader, I’ve discovered my “novel” thinking isn’t quite the epiphany I thought it was and you can probably Google “Wheel of Fortune” (no, not Pat Sajak and Vanna White) and “Options” and find a description of this strategy on the web.

If you give this a shot, let me know what results you come up with! I’m sure this is just the beginning of the JC Penny trading saga as it was with CLF two years ago, so keep an eye out for next month’s income report to see how it turns out!

I hope your trading is going well and I’d love to hear from y’all. Feel free to drop me an email at nakedoptiontrader@gmail.com, leave a comment on the site or catch me on Twitter @optionstudent.

Until next month!

Happy Trading,


May Net Option Trading Income: $32.25

May Dividend Income: $7.56

Total May Income:  $39.81

Total 2016 Net Income:  $367.62


Current Dividend Stock/ETFs Holdings

Symbol # Shares Quarterly/Monthly Dividend Per Share Annual Dividend Per Share Cost Basis Yield Pay Month
ADM 10 $.30 $1.20 $37.10 3.23% C
HCP 10 $.575 $2.30 $27.28 8.43% B
JNK 10 $.189 (monthly avg) $2.27 $33.95 6.68% M
STR 10 $.22 $.88 $25.33 3.47% C
TRN 100 $.11 $.44 $48.10 .91% A

A = (Jan/Apr/Jul/Oct)   B = (Feb/May/Aug/Nov)   C = (Mar/Jun/Sep/Dec)   M = Monthly


May Dividend Payments

Stock/ETF Total Dividend Paid
JNK $1.81
HCP $5.75


May’s Option Trades

Strategy Stock/ETF Option Entry Price Exit Price Commission Net Profit % Gain/Loss # Lots
CC CLF Jun 16 $4.5 Call $.31 $.12 -$6.11 $31.89 61.29% 2
CC TRN Jun 16 $21 Call $.56 $.25 -$3.07 $27.93 55.36% 1
P JCP Jun 16 (W) $9 Put $.41 $.79 -$1.50 -$39.50 -92.68% 1
P AA Jun 16 $9 Put $.31 $.16 -$3.07 $11.93 48.39% 1

CC = Covered Call   P = Sold Put   -Rx = Roll #X from previous trade

Join the discussion 5 Comments

  • Ricardo says:


    I’m starting to dabble in trading options myself and the learning process behind trading is to be honest so difficult. I notice that you go for low priced stocks, I believe you can get a gain but it would take time to see the results. My plan as I train myself to trade,to utilize paper trade and study up on the importance of options trading. Thank you for posting the useful information and I wish you the best of luck. If during my training I find something useful I will share it with you. Keep up the good work!

    P.S. I will trade high dollar stocks who’s price jumps up or down and focus on weekly options.

    • Patrick says:


      You’re correct that I focus on low prices stocks. I’ve got a small account and I sell puts and calls mostly, not spreads so it takes a lot of buying power to execute my trades.

      As such I focus on small stocks so each trade represents a small portion of my account. If I were to focus on higher prices stocks a single trade or two could wipe me out.

      When you’re talking about prices going up and down a lot, you’re talking about volatility. That’s not limited to just high dollar stocks but also smaller stocks.

      I recommend reading TastyTrade’s stuff on implied volatility rank. I’ll find a link and post it for you tonight.

      Happy trading,

    • Patrick says:


      Here’s the link to TastyTrades “Learn” site: https://www.tastytrade.com/tt/learn

      And here’s their link to Implied Volatility Rank: https://www.tastytrade.com/tt/learn/iv-rank

      Take some time, watch some of their videos and let me know what you think.

      I’d also like to hear what kind of trading you’re doing? Are you selling or buying options? Selling puts/calls or spreads? Or something entirely different?!

      Happy Trading,

  • Ricardo says:

    Excellent site I just discovered!

    • Patrick says:

      Yup, that’s a great site to just dig and find tons of data on a specific stock or sector. I had that one introduced to me when I was sitting talking to someone before the beginning of one of the Blue Collar Investor’s in-person seminars.