In October and November 2024, I implemented a rolling options strategy to maximize my income through premium collection while managing potential risks. Below, I’ll walk through each trade, including the rationale behind rolling, capturing premium, and other key insights from this options strategy.
Trade Summary
Throughout these two months, I executed a series of call and put options on several stocks, notably SMCI, VZ, T, and HOOD. My approach focused on selling options to collect premiums, rolling contracts to adjust risk and capture additional premium, and letting some contracts expire worthless to secure gains. Here’s a detailed breakdown of each trade.
1. SMCI PUT Options: Active Rolling Strategy
The SMCI options played a significant role in this strategy, with a continuous series of puts rolled to optimize outcomes. Here’s a closer look:
- 10/10/2024: Started by selling an SMCI $40 PUT, expiring on 10/25, for a premium of $81. Rolled to a $40.5 PUT expiring 11/1 for more strategic positioning.
- 10/11/2024: Sold SMCI $40.5 PUT (11/1) for $55, then rolled it to a $44 PUT expiring 11/8 for added premium.
- 10/14/2024 - 10/16/2024: Continued with a series of SMCI PUT rolls, ultimately landing at a $46 PUT with expiration extended to 11/29, capturing additional premiums along the way.
Outcome: This series of SMCI PUTs exemplifies the benefits of rolling—capturing incremental premium, extending time frames, and increasing the strike price to align with my market outlook.
2. T and VZ CALL Options: Capitalizing on Premium from Expiration
- T $23 CALL (10/25, 11/8 Expiries): Both of these options expired worthless, allowing me to keep the entire premium.
- VZ Calls: The $46 CALL (10/25) and $42.5 CALL (11/8) also expired worthless, again yielding full premium capture.
Outcome: The T and VZ calls were well-positioned above current market levels, giving a low probability of assignment and allowing me to retain all premiums without needing to roll or close out early.
3. HOOD PUT Options: Selling for Steady Premiums
- 10/29/2024: Sold a HOOD $25 PUT expiring 11/28 for $65, which eventually expired worthless.
- 11/11/2024: Sold a HOOD $31.5 PUT expiring 11/22 for $63. This position was part of a straightforward premium collection strategy.
Outcome: The HOOD PUT options provided consistent premium income without needing to roll. These contracts were placed with comfortable strike prices, leading to expiration without any additional management required.
4. VZ $41 and T $23 CALLS (Expiring 11/15 and 11/22)
- 11/11/2024: Sold a VZ $41 CALL (11/15) for $15 and a T $23 CALL (11/22) for $8, both designed for potential premium capture with minimal risk of being called away.
Outcome: These were smaller plays in the larger strategy, offering steady premium income with low assignment risk.
Key Takeaways from My October-November Options Strategy
Rolling as a Premium-Enhancement Tool: Rolling allowed me to maximize income from the SMCI PUT options. By adjusting strike prices and expiration dates, I could manage risk while enhancing premium collection.
Capitalizing on Expiring Options: A significant portion of these options expired worthless, which is ideal in an options-selling strategy. The T, VZ, and HOOD options were positioned carefully to expire out-of-the-money, enabling me to keep 100% of the premium.
Managing Risk with Strategic Strike Adjustments: With some positions, I gradually increased the strike price, especially with SMCI. This maneuver allowed me to remain in the trade for longer, capture more premium, and maintain a favorable risk profile.
Consistent Premium Income: This strategy generated consistent cash flow, contributing to the overall growth of my portfolio. The cumulative premiums from these options reinforced the value of a disciplined selling and rolling strategy.
Final Thoughts
The October-November period demonstrated how a structured options-selling strategy can yield steady returns, even with volatile underlying assets. By strategically rolling SMCI PUTs and allowing other options to expire worthless, I maximized my income and managed downside risks effectively.
If you’re exploring options selling, consider incorporating rolling and expiring strategies like these to capture premiums consistently. Remember, always assess the risk tolerance, monitor market movements, and adjust positions as necessary to optimize your portfolio.