Thursday, 4 June 2015

Options Trade - BHP Billiton

In November 2014, I sold a put in BBL that expires in a couple weeks. Being in the money, I decided to roll my put down and out. The trades look like this

Bought to Close

May/28/2015 BTC 1 BBL Jun 19 '15 $50 Put @ 5.30 ($11.20 commission)
Nov/18/2014 Sold 1 BBL Jun 19 '15 $50 Put @ 3.00 ($11.20 commission + $0.01 SEC fee)
Profit: -$252.41


Sold Put

Jun/04/2015 Sold 1 BBL Dec 18 '15 $40 Put @ 3.90 ($11.20 commission + $0.01 SEC fee)
Days Held (sell date to expiry): 198
Net Premium: $378.79
Annualized Return = ($378.79 / ($4,000 - $378.79)) * 365/198 = 19.3%

The most likely outcomes of this trade are:

1. Shares are trading above $40.00 at expiration. I will get to keep $378.79 in net premiums.

2. BBL is trading below $40.00 at or before expiration and shares are assigned. I will receive 100 shares of BBL at a net cost of $36.21/share.

2 comments:

  1. ADY,

    That looks like a good trade. Between that and your NOV put, you have some pretty solid premium you should be able to earn. A month or so back I actually sold a BBL Sept 15 $55 covered call that should be money in the bank.

    MDP

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    Replies
    1. We will know in Dec. I'm hoping to make up for my loss on the previous put. It's hard to imagine BBL @ $36, but with the market playing manic depressive, who knows. That would give it a dividend yield of 6.9%! And I can live with that.

      At this rate, I think you'll be pocketing your call premium. I've got a put expiring in 14 days and it looks like it will expire worthless. I'll be making about $280 CAD, which is good for toilet paper in the US, but still...

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