May options expiration, naked puts in COH, CCJ, VTR & more

There wasn’t much drama in this month’s option expiration for me. This is partly because I only had two naked put option positions outstanding for this month, but also because not much had changed since last month.

One of the naked put positions was even farther out of the money (OTM) than it was a month ago, while the other was still trading right at/around the strike price. The latter did end up expiring slightly in the money (ITM), and I was put the units (see below). (I had placed a limit order to roll that position out, but did not pursue it aggressively as I didn’t mind owning the underlying stock as an investment.)

Looking ahead to next month, I have eight expiring naked put positions. Most are trading out of the money. As usual, I may consider rolling out any that look like they may expire ITM.

Options expiration results:
CVR Partners (UAN) – Some May 20-strike put options that I sold against UAN on 11/12/13 for $3.75, as part of a roll-out/roll-down risk adjustment of an earlier position, expired ITM resulting in me being put the units of this nitrogen fertilizer products master-limited partnership at a cost basis of about $20, just a bit above where it’s currently trading.

Ventas (VTR) – A May 55-strike put option that I sold against VTR on 12/4/13 for $3.65 expired OTM for a 5-1/2-month net return of 6.6%.*

New positions since last month’s expiration include November-, December- and January-expiring naked put options in Cameco (CCJ), The Carlyle Group (CG), and Coach (COH).

* 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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