Stock Options Expiration Report

Last Friday saw June options expire and saw a few of my options positions close.

On April 26th I had opened a Jun / Sep $85 call calendar spread on NRG Energy, Inc. (NRG). I was able to sit in that trade through a stock split and on June 4th simply closed the position for an approximate 56% profit.

On April 30th, I had sold a 1,420 - 1,430 - 1,580 - 1,590 June iron condor, bringing in a $1.25 credit. The market was very cooperative and never threatened either side of the trade. I closed the short options out for a nickel a piece. My net profit was $1.15 or about a 13% return on capital.

There were a couple "losers" along the way, to be sure. A spread on IWM did not work out and was shut down for just a $12 profit. I misjudged AAPL and shut down a position for a $8 profit. Yep, that's about it for "losing" trades this month. It is a good thing when your "losers" don't hurt you.

In a prior post I told you about by double diagonal spread on SBUX, which now has a small guaranteed profit but will probably see the remaining July out-of-the-money call option expire worthless next month. It is not consuming any capital or margin, so the contract will simply sit in the account unless there is a big upside move on this stock.

I also had other positions in my account, which have been adjusted heading into the June expiration. Those remaining positions are all showing a profit.

So, am I just bragging over some good fortune? The message behind me sharing these results is that June was a good month for me, but now because I guessed right on every trade. There were a few trades that did not work out. What allowed me to maintain profitability is that when a trade was not performing in line with my expectations, the trade was shut down. It happened that I was able to shut each trade down for a small profit, but that does not always happen. Losses will occur.

The key is to recognize that you will be wrong about a fair number of your trades. Don't let you ego, or your wishfulness, get in the way of your trading. Shut them down, reallocate the capital, and let your winners mature.

Good trading!

Christopher Smith
TheOptionClub.com