Options are closing today, as on most Fridays, but today I have several options expiring - more than usual. Most of the positions were initiated this week, in an attempt to optimize capital utilization. Thanks to limited downside volatility (the value of the underlying companies did not drop below the exercise price), I should stand to clear the premiums on the below positions - roughly $200 on about $35,000 or 32%, annualized. If I could replicate this result every week (assuming I entered these positions this week) I would earn about $11,000 in a year.
Short-held option positions expiring today.
Another position expiring today was initiated for a different purpose. I had been a U.S. Bancorp (USB) shareholder for a long time. Actually I had inherited the holding from my grandmother who held it for decades. With the market downturn in February, I had a capital loss available to harvest (realize a loss to offset gains in other positions for tax purposes). USB is widely recognized as one of the most efficient banks in the world.
As shown below, I sold a pair of put option contracts for a total of $600 with a strike price of $36.00 per share. Since the market price at today’s close will likely be below $36, my broker will assign 200 shares to my account in exchange for $7,200. Effectively, I will own 200 shares at a $33.00 cost basis.
USB, bought at a discount.