Happy Sunday!
The fed delivered a larger interest rate cut and the market celebrated. The rally also hit the profit targets for all my existing positions, which means:
a) For the first time in a long time, this portfolio doesn't have any positions on
b) That necessarily means that 100% of my trades since this portfolio started have been closed for a profit
That's a pretty great place to be in.
Today's update closes out the oldest position in this portfolio, which was a trade that initially didn't go as planned and I got assigned shares, but eventually still got out of the position with a nice profit.
This week:
$622 profit in Realty Income (O)
$622 profit in O
The longest-running position in this portfolio has finally come to a profitable close.
In August 2023, I sold a put in O at the $57.50 strike, which ended up getting assigned early, which means I had to buy 100 shares of O at $57.50 per share.
I did collect some premium from selling puts, which led to realized profits of $115.
To get out of the position, I started selling covered calls against the 100 shares that I owned.
In total I sold 5 covered calls at different periods, bringing in a total realized profit of $223.
At the end of selling the covered calls, my 100 shares of O were sold for $57.50, exactly the price I had initially bought them for.
On top of that, O pays a monthly dividend, and I received $284 over this period, not counting for reinvested dividends.
All in, this adds up to $622, which isn't a bad return against $5,750.
The key to succeeding at options is to always have a plan. In this case, if things don't go well, I immediately switched strategies to selling covered calls, and then it's just a matter of playing the waiting game until the stock gets called away.
This is actually a great example of the "wheel" strategy, where you sell cash-secured puts, get assigned stock, and sell covered calls to get out.
Anyone who had bought and held the stock over the same period would receive the same dividends.
However by selling options against this position, I've brought in $338 more in cashflow, which is basically juicing the dividends to pay more than 2x their dividend yield.
I usually refer to being assigned as the "worst case" scenario. If this is the return from a worst case scenario, it's a win in my book.
As always, this trade (and all trades I post here) are real trades with real money in my own portfolio and shared with my private community and updated in close to real time.
Even though this was a “bad” trade, over the last year a subscriber to the private community would have their subscription for the entire year covered by this trade ($49 x 12 = $588)
And that's just this one trade! Meaning all other trades were pure profit.
You can find out more about the Bread Crumb subscription at the link below.
Closing thoughts & useful links
Like I said in the intro, the rally has been great for closing trades for a profit.
However, the one down side is that now isn't the best entry point for new trades, so I'm going to be sitting and waiting for a while.
With earnings season coming up in a few weeks, hopefully I don't have to wait for too long.
Have a good weekend!
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This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.