Investing For Income... Short Term Put/Call Option selling, July 19, 2020

[banner8888]

I use several investment strategies to provide myself with a income stream from my personal and retirement brokerage accounts. The purpose of this and future post is to keep track of the outcome of two of those strategies. I will keep the title consistent except for the date to help with tracking.

I'm working with two accounts. My personal account allows for both Naked put selling and call writing on owned stock. My retirement account does not allow Naked put selling. Thus, I use the personal account for put selling and the retirement account for Call writing. I use three weeks or less for the strike date and around 6-9% below market value for the strike price.

Each post will (most likely) include the following information.

Step 1. What I plan on buying in the next go around.
Step 2. What I actually ending up buying from step 1.
Step 3. What I actually made/loss when a position is closed out.

July 19, 2020

Step 1.

1. Buy 100 Shares IWM. Sell 1 Aug. 7 Call @ strike price 133. Current IWM price 146.59
2. Sell 1 Aug.7 Put PM @ strike price 69. Current PM price 75.03

Step 2.

NA

Step 3.

NA

A little information on how I choose IWM and PM.

IWM

1. I would be ok owning this long term. History is on the side of this ETF out performing the overall market over time. Not much in the dividend department though.
2. The option premium is good enough currently. Should be able to make 10-15% APR.

PM

1. Like IWM I wouldn't mind owning this long term. In fact I do. I also use it in a long term call writing strategy.
2. Pays a nice dividend If I end up owning it.
3. Nice defensive stock however it has single stock risk.
4. Good premium on the calls and puts.

That's it for now. Happy hunting!!

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