Back in August 21, 2015 I picked up 100 shares of TMX Group (X) via Put option assignment . Average price per share ended up $49.509, but the underlying stock was whipped down to $45.89; giving me an instant paper loss of $3.619/share.
Unexpectedly, back on October 8th the stock price continued recovering and closed up to $48.95. The following day October 9th it resumed its decline and I saw an opportunity as the premium for November 20th's Call expiry went gone up. (In retrospect, I probably should have sold X, but I don't mind holding this stock.) I took the opportunity to write a Call @ $1.10 with a net premium after commission of $0.9905.
| Date | Symbol | Type | Expiry | Strike | Quantity | Price | Gross | Commission | Net Price | Net Amount | Exposure | Status | Type | Net Revenue | % Gain/Loss |
| 2015-10-09 | X | Call | 11/20/15 | 50 | 1 | $1.1000 | $110.0000 | $10.95 | $0.9905 | $99.05 | $0.00 | Expired | Covered | $99.05 | 904.5662% |
I had gone on vacation not long after writing and returned before October 26. The price had declined to the $46's and I saw another opportunity. This time to write a Put to allow myself the potential to average down. The premium was juicy taking in average $1.1405.
The stock floated around the strike of $46 and by November 9 recovered upwards to $49, but again began to decline again. With less than 10 days to go until expiry, and the need to maintain reserves due to other investments, I decided to close out the position. I still felt it would not likely go into the money and decline below $46 by Nov 20th.
In any case, this trade netted me a gain of $88.10, +77.2468%.
Calculation formula: (Net Sell Premium ($114.05) - Net Buy Back Premium ($25.95)) / Net Sell Premium ($114.05)
= 77.2468%
| Date | Symbol | Type | Expiry | Strike | Quantity | Avg Share Price | Gross | Commission | Net Return | Net Amount | Exposure | Status | Type | Net Revenue | % Gain/Loss |
| 2015-10-26 | X | Put | 11/20/15 | 46 | 1 | $1.2500 | $125.0000 | $10.95 | $1.1405 | $114.05 | $4,600.00 | Closed | Covered | ||
| 2015-11-09 | X | Put | 11/20/15 | 46 | 1 | $0.1500 | $15.0000 | $10.95 | $0.0405 | $25.95 | $4,600.00 | Closed | Covered | $88.10 | 77.2468% |
Option expiry was Friday November 20th and sure enough X closed at $46.69.
a) I was right that my previous Put would not have been assigned.
and
b) as I didn't mind whether X was sold or held, I didn't bother buying it back to close and could afford to wait for the expiry date.
| Date | Symbol | Type | Expiry | Strike | Quantity | Price | Gross | Commission | Net Price | Net Amount | Exposure | Status | Type | Net Revenue | % Gain/Loss |
| 2015-10-09 | X | Call | 11/20/15 | 50 | 1 | $1.1000 | $110.0000 | $10.95 | $0.9905 | $99.05 | $0.00 | Expired | Covered | $99.05 | 904.5662% |
A small gain, but I'll take it: $99.05, +904.5662%
Calculation:
Net Sell Premium ($99.05) / Commission ($10.95)
= 904.5662%
With the Call and Put Premiums collected $88.10 + $99.05 = $187.15 my gross break even price is now $ 49.509 - $1.8715 = $47.6375. Now that I think about it, knowing my new break even; I have more flexibility to either sell the stock above that point or to write another Call at a lower strike price. In addition, a $0.40 dividend was declared, which will give me $40. All things being equal, bumping break even to $48.0375. This will require some more thinking and waiting for the next swing in prices.
Note: Questrade will have a Transaction entry to show the expiry, but it will not show until my next statement. I do have an example of expiry for some $G Goldcorp Put options expired back on February 20, 2015.
No comments:
Post a Comment