Options Trading Income Report – September 2014

134.57
Monthly Income Generated
4.48
Annual Return

Some months are great, like August and some months you just get lucky!

September was a lucky month. Had it not been for starting the Blue Collar Investor program late in the month I would’ve MAYBE broken even, but I actually came out ahead.

My dear friend CLF took a diving leap towards the floor this month…oh if I had just held onto that protective put a month longer! I did the unthinkable and looked up the value of that option, so bear with me for a quick trip down memory lane!

I bought two lots of the Oct 14 $18.00 Put for $4.75 in June and sold it back for $2.00 in August when CLF bounced after the board change of hands. When I last checked it was trading for $9.45…yeah, missed out on that one!

What’s the lesson there? Maybe I should’ve held on until the end, but at the time I was looking at a lot of positive sentiment from the change in the CLF board of directors. What I didn’t bet on was some other environmental factors. Oh well! Live and learn!

Good thing this month? I got paid a $30 dividend for holding onto CLF. Doesn’t nearly offset the loss in value of the stock, but that loss is UNREALIZED…the gain from the dividend is real.

The other benefit comes from the income generated from the trade pulled from the Blue Collar Investor program. I’ll cover the details of that in my upcoming review later this week (I promise!) and how that worked out for me.

I have another quick note for you. Since we added $8k to our account last week, all my percentage gains will be measured against $12,861 ($8k + $4,861 my original starting amount). So, you’ll notice that my annual return will be about half of what it was at (~9%).

So, let’s get on to the details!

Account

September Net Income:  $134.57

Total 2014 Income:  $576.36

Adjusted CLF Share Price:  $ 22.52


 Trades

Strategy Underlying Option Entry Price Exit Price Commission $ Gain/Loss % Gain/Loss # Contracts
Dividend CLF $30.00
CC CLF Sep 14 14.50 Call $.17 $.30 $10.16 ($36.16) -106% 2
CC CLF Sep 14 15.00 Call $.42 $.40 $10.16 ($6.16) -7% 2
Blue Collar Investor TRN Oct 14 47.50 Call $1.79 $.40 $13.95 $125.05 70% 1
CC CLF Oct 14 13.00 Call $.24 $.08 $10.16 $21.84 46% 2

 

What’s Next

I’ll continue to sell CLF covered calls until I can get rid of the stock. The lesson I’m learning with CLF is to really understand the underlying security much better before I take assignment on it. I should’ve just rolled the option out and not taken assignment (Yes, this is exactly the same paragraph from last month to emphasis my point!)

I’ll continue to move forward with learning the ins and outs of covered call writing a little better. I think, however, I’m not going to be a fan of this strategy without buying an associated put with the stock. I’ve learned the lesson the risk lies with the underlying stock with covered call writing all too well now!

Sure, buying a put will dampen my returns on the upside, but it’ll lessen the pain if the stock drops off a cliff (pun TOTALLY intended)!

Keep an eye out this week for the review of my first trade with the Blue Collar Investor and take a quick jaunt over to my Facebook page and give us a like so we can continue with our mission to educate the world on the value of options trading!

Until my next post, happy trading!

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