Report from my other portfolios through options expiry - not all were income trades - updates on the stories there.
Portfolio News
In a week where S&P 500 rose 1.83%, my other portfolio rose 1.63%. Realised profits were 1.03% of closing portfolio value.
Big movers of the week were Global X Copper Miners (COPX) (+12.3%), Canadian Solar (CSIQ) (+11.1%), Lyxor Stoxx Europe Banks (BNKD.SW) (+11.1%)
The banks move features strongly in the covered calls assigned
Bought
Global X Copper Miners ETF (COPX): Copper Mining. Exercised on 37/45 bull call spread at 7.4% discount to $39.75 closing price. This is an interesting play out of a 37/45/34 call spread risk reversal which I set up in July. Let's look at the chart for context.
The initial trade was an October 37/45 bull call spread partly funded by an August expiry strike 34 put option. I wrote in my initial notes that this sold put was not comfortable as it was not below the lows = exactly what happened. Price dropped and the trade was exercised at $34. I then wrote covered calls for September (36) and October (38) against the stock holding and a new naked put at $31 below the lows. The exercise at $38 of the covered call and expiry of the sold call (45) brings the profit to date on the trade to 472% of the net premium. And I remain exposed to the stock at $37
Initial trade rationale set out in TIB551 from an idea from ETF Trade Signal.
Sold
A busy cycle of covered calls assigned especially among European banks.
ABN AMRO Bank N.V. (ABN.AS): Dutch Bank. Assigned on covered call for 5.4% blended profit since June/August/October 2021.
Crédit Agricole S.A. (ACA.PA): French Bank. Assigned on covered call for 1.6% profit since May 2021.
Commerzbank AG (CBK.DE): German Bank. Assigned on covered call for 3.1% blended profit since July/August 2021. Averaging down in August helped.
Electricite de France S.A (EDF.PA): French Utility. Assigned on covered call for 11% blended profit since June/August 2020/January 2021. January tranche was a loser.
ING Groep N.V. (INGA.AS): Dutch Bank. Assigned on covered call for 4.5% profit since October 2021 (two weeks)
Alerian MLP ETF (AMLP): US Oil. Assigned on covered call for 1.6% profit September 2021
iShares MSCI Indonesia (EIDO): Indonesia Index. Assigned on covered call for 0.01% loss since June 2021. With oil prices moving Indonesia can finally pull out of pandemic-induced coma. Trade idea came from ETF Trade Signal
SPDR S&P Regional Banking ETF: (KRE): US Regional Banks. Assigned on covered call for 2.3% blended profit since May/June 2021 on one tranche and 2.2% profit since August 2021 on another. Averaging down helped on the first tranche. I will do a bank relative analysis to work out a replacement approach.
Livent Corporation (LTHM): Lithium. Assigned on covered call for 0.45% blended loss since August/September/October 2021. This is the trade I had to fix before options expiry as I had double sold the covered call. The fix consumed the profits plus a bit. Premiums for October expiries covered the capital loss adequately. I am still invested as part of the fix.
Navios Maritime Holdings Inc (NM): Shipping. Assigned on covered call for 21% profit since September 2021. This trade set off against an averaging down holding. I remain invested.
Shorts
Invesco QQQ Trust (QQQ): Nasdaq Index. With price closing at $368.94, the 353/339 ratio put spread expired out-the-money contributing a small net profit (enough for a coffee). With strong earnings season on us, I will hold off adding new hedges for a week or so.
iShares 20+ Year Treasury Bond ETF (TLT): US Treasuries. In this portfolio I changed things around differently to what I did in the pension portfolio after the big sag in price during the month. I started out with a 147/144.5 ratio put spread. I bought back the 144.5 sold put option and replaced it by selling a 143 strike put option at the same ratio to widen the spread. The next day I sold the 147 strike put option for a tidy profit and bought a 144 strike put option - that left me with a 144/143 ratio put spread. With price closing at $145.03 that spread expired out-the-money.
Had price expired below $143 I would have had to buy 200 shares (the exposed part of the ratio). I do not really want to be long this stock in a rising rate environment. So I sold an October 29 expiry 143 strike call option. My plan was to use the market to find the exit in the event I landed long the stock. I also bought a November expiry 143 put option. I need price to stay below $143 through the October 29 expiry so I do not have to deliver stock and through November expiry so I have a chance of making a profit on the bought put - of course I can convert that into a bear put spread by selling an out-the-money put option. I will most likely not set this up as a ratio spared - I think rates will continue rising the way inflation is running.
Income Trades
In these two portfolios, 42 covered calls written (US 32, Europe 9, Canada 1) of which 11 assigned (US 6, Europe 5) and 16 naked puts written (US 13, Europe 2, Canada 1) with no assignments
Naked Puts
Airbnb, Inc. (ABNB): Travel Services. With price closing at $169.18, the 135 strike sold put option expired - this is part of a 150/200/135 call spread reversal. Expiry for the call spread is January 2022 and net premium of the entire trade was $3.47 - there is scope to lever up maximum profit potential by selling another put option or rolling up the bought call (150) to a higher strike (say 170)
Quick look at the chart shows price is on a trajectory not as steep as the one from March 2020 but it is now consolidating in a range between 160 and 180. Two possible places to sell put options could be the two higher lows at $140 and $160
See TIB541 for the original trade rationale - it is still holding well.
iShares Global Clean Energy ETF (ICLN): Alternate Energy. With price closing at $22.93, the 20 strike sold put option expired - this is part of a 30/35/20 call spread reversal which is currently out-the-money. Expiry for the call spread is January 2023 and net premium of the entire trade was $0.18 - as there is plenty of time to run, the simplest way to lever up profitability is to sell another put option.
Quick look at the chart shows that this whole sector has not moved with the promise we saw after the US Election. $20 looks like a solid place to sell a put option - it has been tested three times in 4 months. My instinct is to put in another call spread just above the current consolidation zone. An alternative idea is to dig into the holdings in the ETF to work out what the leaders and laggards are - something is holding this back. My thinking is it is the green utility stocks which are behaving like utility stocks and not like green technology stock. See TIB535 for the initial trade rationale
United States Steel Corporation (X): US Steel. With price closing at $22.11, the 22 strike sold put option expired - this is part of a 24/32/22 call spread reversal which is currently out-the-money. Expiry for the call spread is January 2022 and net premium was fully funded.
Quick look at the chart shows that price was on a good trajectory and then has retreated to the levels it was at the start of the trade. As the trade is fully funded and the sold put has expired, I will just let this run. See TIB545 for he initial trade rationale
Currency Trades
None
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
October 15, 2021