Options trades and expiration: Naked puts and covered calls on GMR, TNP & more!
I went into this month’s options expiration with only a couple of short options positions – one was naked puts and the other covered calls – as I had already taken profits on several other May-expiring options positions earlier this year. Both of these remaining positions also worked out well (see below).
I also adjusted an existing June-expiring short naked put option position where the underlying stock was trading well in-the-money below the strike price. In this case the current high volatility environment – and resulting high options premiums – made it worthwhile to roll the position out.
Adjusted position:
Tsakos Energy Navigation Limited [[TNP]] – On 5/18/10 I rolled out the June 15-strike put options I sold against TNP on 3/17/10 by buying them back (at a modest loss) and selling some December 15-strike put options for an overall net credit, thus lowering my risk in the position and significantly reducing my net cost basis (to a little over $13) if ultimately put the stock.
Options expiration results:
- General Maritime [[GMR]] – The May 7.5-strike covered call options I sold against GMR on 12/3/09 expired out-of-the-money (OTM) for a 5-month net return of about 11% on the long underlying stock position.
- Universal Corp. [[UVV]] – The May 30-strike naked put options I sold against UVV on 10/7/09 expired OTM for a 7-month net return of about 3.2%.*
* As always, the return on sales of cash secured put options 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).
