Naked Puts

Naked Put Trade Initiated With Square (SQ)

Wednesday April 21, 2021

Square Logo

On Tuesday, I placed an order to sell Apr-30 $225.00 Square puts for $2.10 but the share price rose immediately and my order wasn’t close to being filled so I didn’t check on it anymore that trading session. As it turned out, the price of Square shares did fall enough late in the afternoon for my order to be filled. This naled put trade has the potential to generate an annualized return of 33%.

As with all my naked put trades, I select puts with low deltas which means they have a low probability of closing ITM and producing a losing trade.

Square Naked Put

Square Price Chart

Covered Calls

Covered Call Trade Initiated in Citigroup (C)

Tuesday April 20, 2021

Citigroup Logo

I have to say at the outset that opening a covered call trade today felt uncomfortable. For me, it feels like the stock market has had an excellent run and is about to roll over. That being said, as a systematic trader I have to follow my processes.

Today, I bought Citigroup shares at $69.68 and sold ITM May-21 $69.50 calls for $2.18 which sets up a potential annualized return of 34%. I decided to sell ITM rather than OTM as my Market Timer is currently providing a low reading of 2.5.

Citigroup Covered CallCitigroup Price Chart



Today, I sold my Farfetch shares to close out my unprofitable covered call trade in that stock with a 3.6% loss.

Farfetch Covered Call


Today, I sold my Qualcomm shares for $130.49 resulting in a profitable trade with a 4.2% profit.

Qualcomm Covered Call

April 16 Covered Call Trade Summary

I had nine covered call trades based on April 16 expiry dates and even with the Farfetch losing trade, the average annualized return including commissions was 30.9%. It would be wonderful if my CC trades provide these results every month but my trade results are, in large part, dependent on the movement of the broad market over which I have no control and little foresight.

Covered Call Trade Table

Naked Puts

Naked Put Trades Closing on April 16

Sunday April 18, 2021

Company Logos

I had three naked put trades close on April 16 and each produced a different result.

ViacomCBS (VIAC)

On April 07, I sold Apri-16 $40.00 puts for $0.32. Late in the trading session on Friday, VIAC was trading below $40.00 and I didn’t want to be assigned the shares so I bought the puts back for $0.70 resulting in a 1.1% loss (44.6% annualized). With a low delta of -14, this trade had a low probability of a loss but a low probability is not a zero probability.

ViacommCBS Naked Put

Schlumberger (SLB)

On March 31, I sold Apr-16 $27.00 puts for $0.80. My intent was to be assigned the shares when the puts expired since SLB had been passing one of my covered call screeners and rather than purchase the shares outright, I wanted to sell puts until I was assigned the shares and then sell covered calls. This is known as “The Wheel” strategy. Shares of SLB closed the Friday session below the put strike so I will be assigned the shares on Tuesday. My net share cost will be $26.22 which is ever so slightly below the Friday close.

The astute reader will note that there is a risk with me initiating a covered call trade and that risk that goes against what is, for some, a cardinal CC rule. Do you see anything in the table that would make you hesitate to initiate a covered call with SLB?  The earnings date is April 23 and I generally do not hold a stock in a CC trade through an earnings report. I am going to make an exception for this trade.

Schlumberger Naked Put

Peloton (PTON)

On April 09, I sold Apr-16 $110.00 puts. PTON closed the trading session on Friday at $116.21 so the shares will not be assigned to me and I keep the premium.

Peloton Naked Put