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BookingAlpha Option Trading Advisory

Saturday, June 15, 2019

Enhanced Investing - May 2019 Results

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May ended up bringing a $312.95 realized gain for the account after commissions ($25,000 account at Tastyworks, with 2:1 margin).

A total of 11 short Puts were closed, all of them at a profit. (+$219.53)
There was a Dividend Payment for the CVS position (+$50)
Two Covered Calls on CVS were closed throughout the month (+$43.42). Therefore the CVS long stock position produced a total income of $93.62. Not bad for one month. $6000 capital invested, that’s more than a 1.5% return on Capital in a month. 3% if we consider we are playing with 2:1 leverage.
Year to date, we have closed 83 Short Put positions. 80 winners, 1 loser, 2 assignments (CVS, WBA). The total realized gain made in the year is now +$2,473.22. This represents a +9.9% growth for the first 5 months of 2019. At that same pace, a +23.7% return would be achieved strictly from selling options by the end of the year. Again, this is only the Options premiums plus dividends and we are not considering here, potential stock capital gains (or losses). All that will be computed at the end of the year.

May was an interesting month, because it was finally a down period. Enhanced Investing tends to outperform when the markets are not rallying strongly (small upside, sideways or downside action), and that was evident this month with the S&P500 losing 6.3% of its value.

Unfortunately I’m still paying the price of Risk concentration, holding CVS and WBA simultaneously. Chances are they will move in tandem. The mistake was to play short Puts in those names at the same time. Still, there are 7 more months this year and anything is possible.

Looking at June, current live positions (not shown here) are in decent shape, except for a short Put in CAH that is in the money and a nother one in LOW that is getting close. Volatility has picked up its pace and now premiums are more attractive. No earnings concerns this upcoming month for the most part.

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