Option Investor

Option Writer Portfolio - June

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The chart below represents the current and closed positions that we have done so far this very long month. As you can see we are taking some heat from the recent market declines. But the only positions that concern me right now are USB, VLO and IWM. We all need to be aware that there are risks when writing options and that we won't always profit from every position. On months that we don't reach 80% profitability we can possibly break even or lose money that month. But don't fret, we have some market neutral positions along for the ride this month. If we get a strong buy signal I may take that opportunity to trade a high delta position (in the money) versus a normal position (out of the money).

On another topic, it may appear that we are over allocated by the Assigned Portfolio Cost ($125,168) but that includes both sides of the short strangles (COH, BHP, MOS, and WYNN). The total margin also includes both sides. Which may be accurate because not every option brokerage offers margin calculated on one side of a combination (note: a combination is a fancy word for some sort of spread, straddle or multiple leg spread position). Taking the higher calculation, we are at $87,000 for assignment and $15,300 for margin.

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