September options trades and expiration: TNP, BMY, O, AEE & more!
This past week was September options expiration and I had the following options positions expiring:
- Ameren [[AEE]] – The September 25-strike puts I sold against AEE on 2/24/09 as part of a defensive strategy to address losses in my long position in the stock expired out-of-the-money (OTM) for a 7-month net return of 13%.*
- Bristol-Myers Squibb [[BMY]] – The September 17.5-strike puts I sold against BMY on 6/15/09 expired OTM for a 3-month net return of 3.2%.*
- Tsakos Energy Navigation Limited [[TNP]] – The September 12.5-strike puts I sold against TNP on 6/23/09 expired OTM for a 3-month net return of 4.3%.*
New positions
Realty Income [[O]] – On 9/15/09 I sold some March 30-strike covered calls against my long position in O as the stock rallied back to its recent highs:
I own this real estate investment trust (REIT) in my IRA at a cost basis of below $20 per share and don’t have any current plans to sell it. It has been a better-than-average performer in the sector and continues to generate a nice monthly income.
That said, it might be expected to have difficulty trading above the $30 resistance level – a price at which it could also be said to be more than fully valued. If O is above the $30 strike near expiration, I’ll make a decision at that time whether to roll out the covered call position or let the stock be called away.
Southern Co. [[SO]] – On 9/17/09 I sold some February 30-strike puts against SO:
Currently trading at about $32 and yielding about 5.5%, the shares of this southeastern U.S. electricity distributor are currently in an intermediate-term uptrend, but are presenting a more neutral/unclear shorter-term picture. The company has a recent history of increasing its dividend and has an estimated five-year earnings growth rate of 8.5% (according to MSN Money) – above average for a utility. The stock appears to be a reasonable value here, and of course would be an even better one below $29, which would be my cost basis if I’m ultimately put the shares.
* As always, the return on cash-secured put sales was based on the premium received from the sale of the options (minus commissions) against the unmargined capital set aside to pay for their possible assignment (i.e., my being put the shares of the stock).
