Monday, November 23, 2015

Options Expiration Update: November 23, 2105

Well, this last week has been interesting. Following the Friday night nastiness in Paris, the US markets popped big time on Monday. Tuesday was effectively flat, then Wednesday things swung positive again as the markets seemed to accept and digest the likelihood of a December liftoff by the FOMC. Thursday was flat again, though all of my positions rose slightly with HCP the best performer at 1.55%.

Friday the market took off again, rallying another 1%. Even so, all my November 20 calls expired worthless. I'll still have to keep an eye on the MRK December 18 position when Merck's ex-dividend date rolls around since it's still in the money.

Today I executed the following transactions:

I now have all my positions synchronized to the December 18 expiration. The FOMC meets the 15th and 16th so if they do raise interest rates, that will happen before expiration. Although everyone knows the increase is coming I still expect a knee-jerk reaction that should knock HCP and ED down a little. If they're out of the money, that will be a positive for me since I won't have to roll out.

Tomorrow HCP pays its dividend and we should also see MRK announce their January dividend before the Thanksgiving holiday. None of these three companies will have ex-dividend dates in December so I won't have to think much about the positions until the 18th. With that in mind, income for the month of November looks like this:

20.17% annualized - I think that's pretty good considering that last week the markets as a whole were up quite a bit with the consequence of reducing volatility and options premiums.

ETA 11/24: Merck declares $0.46 dividend payable to shareholders of record 12/15. That makes the ex date 12/11 so I'll have to roll out 12/10 if the MRK position has less time value than $0.46.

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