April options expiration, naked puts in MSFT, JOY, GG, VOD & more

This month’s options expiration worked out well, with six out of seven of my April-expiring naked put option positions expiring out-of-the-money (OTM), resulting in full profits. My one in-the-money (ITM) naked put position was trading with a small profit and I rolled it out to a later date (see details below).

Looking ahead I have only two naked put positions expiring in May. Both are currently trading OTM – one very comfortably, the other very close to the strike. The latter position has already been rolled down and out once as part of a risk reduction adjustment and is basically a breakeven trade at this point, so I may look to roll out again to try to capture a profit or lower my potential net cost basis in the shares if I am ultimately put them.

Options expiration results:
Franco-Nevada Corporation (FNV) – An April 40-strike put option that I sold against FNV on 10/11/13 for $4.50, as part of a roll-out/roll-down risk adjustment of an earlier position, expired OTM for a 13-1/2-month net return in the total position of 7.6%.*

Joy Global (JOY) – An April 50-strike put option that I sold against JOY on 10/11/13 for $4.31, as part of a roll-out/roll-down adjustment of an earlier position, expired OTM for a 14-month net return in the total position of 8.5%.*

KKR Financial Holdings LLC (KFN) – Some April 10-strike put options that I sold against KFN on 11/8/13 for $0.85 expired OTM for a 5-month net return of 8.5%.*

Microsoft (MSFT) – An April 30-strike put option that I sold against MSFT on 7/19/13 for $2.10 expired OTM for a 9-month net return of 6.7%.*

Global X Uranium ETF (URA) – An April 15-strike put option that I sold against URA on 10/7/13 for $1.40 expired OTM for a 6-month net return of 8.7%.*

Weyerhaeuser (WY) – Some April 25-strike put options that I sold against WY on 8/28/13 for $1.60 expired OTM for a 7-1/2-month net return of 6.4%.*

Adjusted positions since last month’s expiration include a roll-out of a naked put position in Digital Realty (DLR), where I bought back a somewhat in-the-money April-expiring 55-strike put option for a small profit and then sold a DLR January 55-strike put option for $7.43. This is the second adjustment of this position and further lowers my potential cost basis if put the stock. (The first adjustment was a roll-out/roll-down risk adjustment.) If ultimately put the stock, my cost basis will now be about $47.

New positions since last month’s expiration include September, October, and January-expiring naked put options in Cameco (CCJ), Goldcorp (GG), Mobile Telesystems (MBT), Global X Uranium ETF (URA), and Vodafone Group (VOD).

* As always, the return on sales of cash secured or naked put options was conservatively calculated based on the option premium received from the sale of the options (minus commissions) against the unmargined capital set aside to pay for the possible option assignment (i.e., my being put the shares of the underlying stock).

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