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You may remember back in September when I opened a "short straddle" with BBVA. You can find that post here. Well the buyer of the call exercised his right today before expiration and I had 200 shares called away at $8/share.
Let's find out if I would have been better off just holding the shares and selling 200 shares today.
I sold 2 $8 calls for a premium of $120 and 4 $6 puts for a premium of $160. I received $280 in total premiums plus $8 x 200 shares = $1600. In total I received $1880 for my 200 shares. This is basically $9.40/share.
As of today, shares are trading at $9.53/share. I would have been slightly better off by holding onto the shares and selling today. I also would have paid a little less in commissions.
However, I'm happy with how the trade turned out as it reduced my risk exposure. My cost basis was $7.31/share on those 200 shares. I've also received some dividends that I'm not counting. That's a return of over 30%. Not too bad.
Unfortunately though, this has reduced my shares to 208 from 408 and my forward dividends by $98/year. I have already found a home for the proceeds and will talk about that trade later.
I've updated this trade on my options tab.
I will be looking for another attractive BBVA put option to sell.
30% is a great return over +/-4 months. There's not much you can do about the share price actually being better today than what your effect sale price was. All you can do is manage the position.
ReplyDeleteI was checking on WFC today and there's some nice put premium available on the Feb cycle. If you're looking to get back into the banking sector I think WFC could be a great place because they are one of the best banks.
I'll have to take a look at WFC. I really don't want to buy a U.S. Bank stock but if I did, WFC would be at the top of the list. I'd rather pick up a "safer" bank out of Canada, maybe RY or TD.
DeleteTake care