An eventful expiration
I’m unable to process the current weekly trend analysis this week as I’m on vacation and away from my main PC. However, given last week’s market action, there’s little doubt that the trend remains positive – and it’s hard to imagine it changing dramatically in the next week.
The most important thing about last week for me, of course, was that it was options expiration week. With nine short put options positions (and a DuPont (DD) covered call position) expiring, there was plenty to keep an eye on.
As the week began, several of the positions – Bristol Myers Squibb (BMY), Time Warner (TWX), Verizon (VZ), Weyerhaeuser (WY), and Whirlpool (WHR) – were still trading at or in the money. While I could have bought many of these back during the week for a profit or breakeven, given the market’s bullish tone I elected instead to let the positions play themselves out, knowing that I’d end up being put at least some of these stocks.
As it turned out, I ended up being assigned the TWX, VZ, and WY – all at close to a net breakeven or slightly positive initial cost basis (taking into account the original premium gained from selling the respective put options). I’ll now be looking for covered-call opportunities on these new long stock positions, as well as on my already existing shares of DD (where my net purchase cost is now about 46.25).
The other short put positions expired at or out of the money and yielded nice net returns for the four weeks or so that I had held them: BMY (1.47%), Dow Chemical (DOW) (1.35%), Freeport McMoran (FCX) (1.5%), Lear Corp. (LEA) (1.05%), Merck (MRK) (1.4%), and WHR (2.76%). This coming week I’ll be looking to start establishing some new short put positions for the next options expiration in August.
