Periodic log of issues/comments/notes on PUT activity.

5/23/2011 Had HPQ options assigned. I was looking closing this before the SCHEDULED earnings, but HPQ had leak and moved up announcement and stock dropped over $2.50 before getting a chance to close at a profit. Selling CC's against this holding. Rolled the BRK.B May$80 to Sep11 $77.50. Closed 3 positions (EXC, TEVA, TEVA) in taxable account to open up some leverage $ for new PUTs.

5/9/2011 Sold SU PUTs in taxable account for my first energy related PUT in quite a while now that the price per barrel of oil is under $100. High IV allows for higher return with a delta within my investment criteria.

4/21/2011 Sold more TEVA PUTs today in taxable account after $4.00 drop in one day due to results of a BIIB MS Drug appearing better than a TEVA drug. We'll see in a few months if my strategy of selling DOTM PUTs in my taxable account can overcome a mini-black swan in a stock.

4/15/2011 GREED IS BAD!: Had BAC Apr11 $13 PUTs in IRA account set to expire at the close of trading on 4/15. BAC announced earnings that morning with the stock at $13.20. Stock moved up in early trading to $13.30+ so I didn't close the position. I had to leave for several hours and when I returned BAC was down to $12.80-$12.90. I closed the position for $.15, still made money, but could have closed for $.02 in the AM. Greed cost me 30% of my profit on this position. At least closing the position was correct as BAC was down 3-4% on 4/18 when I sold Jun11 $12 PUT.

Abbreviations used in Covered Call and PUT posts.

AY: Annualized Yield
CAGR: Compound Annualized Growth Rate.
CACAGR: Call away CAGR. Stock price compound growth rate required before stock is price exceeds strike price.

CC: Covered Call
CD: Current Delta.   I treat the "Delta" as a positive whole number.
CSP: Cash Secured PUT
EA:  Exposure Amount (PUT strike price * # shares)
SEA: Stististical Exposure Amount (EA * Delta * .01).  
WSEA:  SEA when option written.
CSEA:  Current SEA (EA * CD * .01)
IV:  Implied Volatility
RAY: Realized Annual Yield. Used when a PUT is closed.
WD: Delta of option on date written. Delta is always shown as positive number between 1 and 100.

Use of PUTs for income in IRA's.

I use PUTs in IRA accounts for income and to maintain at least some conservative investment positions. All PUTs are written out of the money (OTM) (Strike price is lower than the stock price when the PUT option is sold).

Goal with these options is 12%+ annualized return on the option. These options are usually sold 3+ months into the future.

Recent trades

4/18/2011 BAC Jun11 $12 $ .35 AY 16.5% WD: 37 CD: 56
4/6/2011 BRK.B May11 $80 $1.35 AY 13.3% WD: 38 CD: 47 Clsd 5/20 CAY: 8.2%
3/11/2011 BRK.B Jun11 $80 $2.11 AY 9.6% WD: 27 CD: 54
3/11/2011 HPQ May11 $39 $1.09 AY 14.0% WD: 30 CD: 22 Assigned
2/15/2011 SNY Jun11 $32 $1.80 AY 16.4% WD: 30 CD: 6 Clsd:5/9 $.10 RAY:22.6%
1/24/2011 BAC Apr11 $13 $ .49 AY 16.1% WD: 30 CD: 25 Clsd:4/15 $.15 RAY:10.4%
5/20/2011 BRK.B Sep11 $77.50 $2.57 AY: 9.9% WD: 40 CD: 44

CD values updated 5/20/2011 after close.