With all the chatter on Twitter lately about jaw-dropping gains in the prices of Tesla and Bitcoin, writing a post about selling put options feels excruciatingly boring! It’s as though I am in a community of one.
Mind you, there is a small portion of my investment portfolio that is certainly exciting but my posts here are a means of me keeping myself honest about the value (or lack thereof) of generating income through collecting put premiums every month.
I know that I sound like a broken record (for those of you old enough to remember what happens when you have a deep scratch on a vinyl record) when I say that the US equity markets continue to provide excellent opportunities for selling put options on stocks.
Since I began posting my put option trades here on my humble blog last year, I have closed 45 trades and have a median annualized return after commissions of 13.3%. If you trade on one of the ultra-low commission online brokerages, your returns should be better than mine. I pay higher fees than I would if I switched to Interactive Brokers but I may get better fills.
For those of you who aren’t fully familiar with naked put options, I am using the holdings in one of my investment accounts as collateral for these trades. I am not tying up any capital by selling put options. I could have 100% of my account invested in ETF’s and still sell naked puts using the ETF’s as collateral. You could consider selling naked puts as a side hustle. Essentially I am selling insurance in that I am assuming risk and am being paid to do that.
I am going to sign off with a picture of me enjoying the view from our historic home in coastal Newfoundland.
I am posting this before the end of the week given that Christmas Day is on Friday.
Since starting to sell naked puts earlier this year, I have now closed 38 trades with a median annualized return of 14.7% after commissions. Both the S&P 500 and the Nasdaq 100 have positive momentum and the VIX is above 20 so conditions continue to be favourable for selling puts that pass my screen.
With US equity markets continuing to be strong and the VIX remaining above 20, conditions are still favourable for selling naked puts on select stocks.
I discovered a site this weekend that you may find of value if you invest in individual US or Canadian stocks. Simply Wall St claims to have over one million users and provides investors with a thorough overview of stocks and allows you to create a watchlist or portfolio for free. There are options for paid subscriptions which provide for unlimited company reports, watch lists and portfolios. I signed up for the free plan and am impressed with the site so far.
The US stock market continues to provide all the right conditions for naked put option selling. Since starting to post about my naked put trades, I have closed 31 trades with a median annualized return after commissions of 13.3%
If you have an interest in generating income through option writing, here is a post at the EarlyRetirementNow site that I guarantee you will find interesting. The post provides an independent review of the blogger’s trading strategy of selling weekly SPY 5-delta put options on Monday, Wednesday and Friday. The weekly put options that are sold expire on the nearest expiry date. For example, put options sold on Monday expire on Wednesday. I hope you find the post valuable.
OptionStrat is a new free site for analyzing almost every imaginable option trade in near real-time. Fortunately, the site allows the user to enter an option trade to analyze and then share a link to same which I will do below.
Today, I sold two options: a PYPL Dec-18 155 put and a QQQ Nov-20 301 call. Prior to selling both options, I set them up on OptionStrat.
Clicking on the above link will reveal the following table on OptionStrat:
The QQQ call had a delta of 0.22 and OptionStrat shows a POP of 83%.
If you wish to see the traditional style option profit/loss graph, you can do so by clicking on a button the below the table.
The image below shows the current exhaustive list of option strategies which can be set up on OptionStrat:
Rather than me writing a review of what OptionStrat can do, I suggest that you head over to that site and try it out. FYI, I did email a question to the site administrator and received a response the same day so I would suggest that you not hesitate to click on the Contact link if need info.