June options trades and expiration: DOW, BBT, HD & more!
This week was June options expiration and I had the following options positions expiring:
- BB&T Corp. (BBT: 23.56 +1.90%, yld: 2.60%) – Some June 17.5-strike puts I sold against BBT on 1/7/09 expired out-of-the-money (OTM) for a 5-1/2-month net return of almost 13%.*
- Dow Chemical (DOW: 26.47 +2.28%, yld: 2.32%) – Some June 7.5-strike puts I sold against DOW on 4/20/09 expired OTM for a nine-week net return of 3.8%.*
- Kraft (KFT: 30.58 +0.76%, yld: 3.82%) – The June 22.5-strike covered calls I sold as part of a buy-write position in KFT (i.e., I bought the stock and immediately sold the calls against it) initiated on 3/19/09 expired in the money (ITM) and the stock was called for a three-month total net return of 5.9%, not including a dividend payment collected in the meantime.
- Norfolk Southern (NSC: 57.91 +1.37%, yld: 2.42%) – The June 20-strike puts I sold against NSC on 3/4/09 expired OTM for 3-1/2-month net return of 6.4%.*
- Realty Income (O: 33.78 0.00%, yld: 5.09%) – Some June 25-strike calls I sold against my long position in O on 11/25/08 expired OTM for a 7-month net return on the position of about 12.3%.
New positions
This past week I finally exited my position in shares of Amgen (AMGN: 52.91 +0.76%, yld: N/A%) – which I’d originally been “put” in early 2007 only to have it drop by 30% – with a relatively small loss. In the interim I’d sold several covered calls (and LEAPS) against the position to improve my cost basis, and then earlier this year converted the position to a July bull call spread (see this post for details). The time premium on the July 50 calls I was short had shrunk to a point that it made sense to close out the position now rather than wait to try to squeeze out the little time premium remaining.
I’ve also recently initiated the following new options positions:
- On 6/15/09 I sold some September 17.50-strike puts against Bristol-Myers Squibb (BMY: 26.58 +0.57%, yld: 4.81%).
- On 6/03/09 I sold some January 25-strike covered calls against my long position in Magellan Midstream Holdings, L.P. (MGG: 23.46 0.00%, yld: 6.10%).
- On 6/03/09 I sold some August 17.50-strike puts against Cal-Maine Foods (CALM: 30.05 +0.87%, yld: 3.18%).
- On 5/29/09 I sold some August 17.50-strike puts against Home Depot (HD: 29.85 +1.50%, yld: 3.17%).
- On 5/27/09 I sold some January 40-strike puts against Kimberly Clark (KMB: 66.18 +0.44%, yld: 2.91%).
- On 5/13/09 I sold some October 17.50-strike puts against Sonoco Products (SON: 33.06 0.00%, yld: 3.33%).
- On 4/20/09 I sold some July 17.5-strike puts against Overseas Shipholding Group (OSG: 34.47 -0.06%, yld: 5.08%).
* 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).
