This article appeared first on enhanced-investing.com(on May 7, 2019)
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April ended up bringing a $535.96 realized gain for the account
after commissions ($25,000 account at Tastyworks, with 2:1 margin). A
total of 18 short Puts were closed, all of them at a profit.
Year to date, we have closed 72 Short Put positions. 71 winners vs 1
loser. The total realized gain made in the year is now +$2,160.27.
This represents a +8.6% growth for the first 4 months of 2019. At that
same pace, a +25.9% return would be achieved strictly from selling
Puts.
Of course, the market is up much more than 8.6% Year to Date. It is
expected that a short Put strategy will make less money in periods of
strong market rallies.
Going forward, I’ll be able to short fewer Puts because part of the
account is now invested in shares of two companies. Two short Puts
became In the Money and ended up being assigned. At this moment, the
account owns 100 shares of CVS at an assigned price of $60 per share and
100 shares of WBA at $65/share. I’ll now start collecting dividends on
these positions and opportunistically sell Out of the Money Calls on
them for extra income.
Looking at May, all open short Put positions look healthy. Volatility
is very low right now in the US markets with the VIX below 13. That,
and the fact that earnings season is winding down means that finding
good option premiums will be harder. So, far we have made more than $500
per month on average, but I am lowering my expectation to the $300/$400
range for the month of May due to the reasons mentioned earlier.
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