Option trade diary #1 – ASML position 1

New series, as I stated in my option article newsflash post. I am going to mix it up. Talking about positions I take and why I take them. These posts are by no means advice , and should not be taken as such. It’s merely me taking you through my thought proces. Do your own homework and risk assessment at all times before doing anything !

ASML is a leading company in chip machines. Which is a highly cyclical business. It’s also one that is highly complicated and very expensive too enter. Hence when your at the top changes are you will be there for a while.

ASML has been one of my favorites for a lot of years now. I have bought the stock at first and as volatility is common I started writing put options. This time things are no different. Given the global trade war and attack on Chinese technology by the American president these are trying times. But in the long run this is only a minor hick up. As everything nowadays is technology driven it’s only a matter of time before things get back too business as usual. With these sort of ‘cyclical’ stocks the price fluctuations are always a bit over the top. Which has it’s direct influence on the option prices.

As I am long in any stock I own, I have written (sold) a put option for december 2022 with a strike price of 140 euro’s per share at a price of 19,05. Which means I received 1905 euro’s for taking te risk of having too buy 100 shares at 140 euro each. Why 1905 when the price states 19,05 ? Well 1 option contact always has the underlying number of 100 shares. So option prices should always be multiplied by 100.

I will sell this when it hits 25% profit, which means buying the option when the option price hits 14,27 (Rounded and including all transaction costs).

Why 25% ? , well what I have done is checking my historic options trading profit percentages and they on average run around the 25% mark. Which means that is psychological my comfort zone. I am not really good at letting my profits run, also these profits tend too be made in shorter time periods than my larger profits. Mostly in a matter of days instead of months. So my conclusion is I am a bit impatient and therefore this is my threshold for now.

Not very scientific maybe, bit then again it’s what I tend to do. So in order not too make things overly complicated I simply put the order in and don’t check it anymore.

First post on options and trading options new style. Will be interested too hear your thoughts and comments.
I will be making more of these as I am opening and closing positions, hopefully you will find my thought process interesting !

Option articles newsflash

Well I have been thinking a lot about my option article series, one representing the actual positions and another one explaining my option strategy and learning curve. I have decided on stopping with the overview. It’s not really teaching anything and I was struggling on getting all the information in a readable format. As such it was just a spreadsheet with some of my gains and losses. While these can be interesting , my current way of thinking is I will post a blog as soon as I enter a position with and explaining why I think it’s a good idea.

Not as an advice that anyone should follow, just showing my thought process presented by a real life example. This combines the two article series in a more learning focused way. And it will save me a lot of hassle presenting large spreadsheets in a meaningful way.

Hopefully these adjustments will help the articles along.

April 2019 – Dividend

Another month passed by quickly. And so it’s time for another dividend update. This month and the next are always big on dividend coming in. This year is no different. It’s also got a few decent increases within the payments which is a nice bonus. Although this is exactly what is supposed too happen, it still feels as a bonus.

Mind you it can also go the other way round. Dividend payments can stop just like that and stock prices can implode as well. The last decade has been amazingly good. So for all of you who are just starting out. Have a long focus and don’t be deterred when things go sideways. Because they will at some point in time.

For now we are enjoying a nice ride, so here are the results for April :

DateStockCurrencyAmount
25-04-2019Ahold DelhaizeEUR70,00
24-04-2019Cisco systemsEUR8,75
16-04-2019WP Carey Inc. REITEUR9,21
15-04-2019NedapEUR50,00
10-04-2019Vanguard FTSE All-WorldEUR57,71
02-04-2019Vanguard Dividend AppreciationEUR1,36
02-04-2019NikeEUR1,96
01-04-2019Coca Cola CompanyEUR8,03
TotalEUR207,02

March 2019 – Dividend

Another month has gone by, time flies and all that. And as every month , another bit of dividend came rolling in. It doesn’t take up a minute of your time and yet it gets you a bit of money. Pretty nice !
Comparing this year with last year , Royal Dutch Shell is missing, I am on route in making my portfolio more environmental friendly and durable. So Shell was sold. I’m aware most of the oil and gas company’s are still in the ETF’s I hold and I am now figuring out more durable ETF’s.

The rest of the list is made up of the usual suspects , see the overview. See you next time !

DateStockCurrencyAmount
29-03-2019Unibail-RodamcoEUR5,40
20-03-2019Unilever EUR7,74
15-03-2019
DowDupont incEUR3,36
14-03-2019MicrosoftEUR8,14
TotalEUR24,64

March 2019 – Option positions

A short note on my options trading. This month I also took some option positions and this time a bit farther away into the future. Since I have time and no rush. In the meantime I am learning and reading up on options. This is a very slow process for me so no new part in the ‘what are options’ series. It’s a work in progress.

I also noticed my options table is a far cry from readable on smaller screens, and less bigger ones. So I am currently in the process of making this table more readable and understandable as well. Maybe it’s needs to be in a totally different format. I am aiming to get this in order with the next update.

Strategy wise nothing has really changed. I only incorporated a part of my savings as a buffer, which is more a state of mind really than anything else. I have not yet need to transfer any money from my savings into my investment account. I have added 1/3 of my savings towards my options portfolio , just in case.

I know this is more of an active approach towards portfolio management and something I don’t do with the vast majority of my portfolio. But this has turned out into a nice hobby and one I can do at my own pace , when I feel good and are up for it. All qualities in an activity which I need.

So for next time I hope having my new overview sorted. I a way people understand it and it’s readable. Until next time !

Februari 2019 – Dividend

Oops , almost forgot to write this post entirely. The Februari dividend update. This month only 1 position that pays it’s dividends. Apple being the one. My Februari dividend income has always been the worst month of the year. Probably the reason I forgot about writing about it. But in stead of combining it with March, I decided too report Februari separately. Quick one this time.

Anyway Februari did indeed produce dividends. A bit less than last year, exchange rates are against me , taking it down 14%. But exchange rates are just a fact. I am not doing anything in the way of compensating for these fluctuations , the portfolio is simply far too small. Well see you in March for the next dividend update.

The numbers :

DateStockCurrencyAmount
14-02-2018AppleEUR9,77
TotalEUR9,77

Goals and finance.

Goals, or dreams. Everyone got them. Goals often start out as a dram, slowly the dream develops into a goal. The easy steps are often taken swiftly. Let’s take a big trip, or better yet a world trip as an example. Travel guides are quickly purchased , a shiny new notebook and a pen for writing down the ideas as well. Let’s start the party ! Long train commutes from and to work are futile ground for plotting the country’s , places and other things to visit on this world tour. It makes you feel better during the day as well, happy days. The notebook quickly fills up, and after a few months it’s almost full.

After all the fun stuff the practical side of things kicks in, the how when and why kick in. And also it will cost a ton of money. Slowly but surely the newly acquired travel guides disappear and the notebook lands on the pile of unfinished projects.

How does this happen ? Well the dreaming and figuring out the fun stuff is new and exciting, it gives you energy. But how do you manage going from the dream to the goal and actually making it happen ?

Don’t get me wrong, dreaming and working on the first part of the goal is a necessary tool for getting off the ground. Keep at it. But make sure the pile of unfinished projects doesn’t get too big. It’s not fun having a large amount of ever growing unfinished projects , worse it demotivates.

As soon as the fun part is over, our world travel plan has a near definitive shape the ‘boring’ part begins , taking care of the logistics of it all. How about the job , house , cats and dogs ? And how are we going to pay for all of this ? Most projects get some start in the way of the hard part. But at some point doubt sets in , some practical solutions may end up in the notebook but for most that’s it.

What does this tell you ? Is it the doubt about the achievability at this moment ? Wait another year ? Or is this dream simply not suitable for you ?

The last question might be the most important one. Is this dream, which along the way has the shape of a goal and a project really worth all your time and a large part of your future time money and energy ?

Think long and hard about all of the dreams you had the last few years, write them all down on a piece of paper. Get the old notebooks out en relive the process. Look at it with one question in mind , how badly do I want this ? Do I really want this world trip ? Or is it just because a lot of people seem to be doing it? Is it an escape from something else ?

Really take your time ! And pick 3 goals you are passionate about , with a limited time frame in which you want to achieve them. Take the easiest one first, let’s say staying in the travel examples, take a citytrip too Valencia. Get out your calendar out and pick a date.

In comes the finance part, make an estimate of expenses, the traveling, hotel and daily budget. Put it all in a nice excel sheet and calculate what it takes too save up for it in the time you have before you go. Even if you have the finances ready, do it to get used too making a sacrifice for your goals.

It teaches discipline and persistence , cancel a night out on the town , or make more creative plans which cost less money. Or make plans to get the money with a new side hustle.

After this first goal , you take it of your list of 3 goals and start the second one. Don’t add more goals too the list until you finish all 3. This is important, it teaches you if your selection process is a valid one. Maybe one was not as fun as it was supposed too be. And it keeps you from being distracted. As soon as all 3 goals are done, you asses them. Were all 3 goals as good as I dreamt ? How much effort went into them and was it worth it ? As soon as this is done you can repeat the process and start over. Let the dreaming begin , and with a better self knowledge you can pick better goals. Have fun dreaming !

Mortgage free ?

Mortgage free , a goal a lot of people aspire nowadays. It’s how I got started viewing my finances differently and more specifically my take on risk. I went on paying off as much as I could as fast as I could. The math was extremely simple, I had an interest rate on my mortgage of 5,35 % and was getting 0,25% or thereabouts on my savings acount.

This turned out to be a smart move , especially when bying a new house, there was some money left after selling the old house and clearing the old mortgage. This made the proces easier , there was no need for stretching towards the maximum lending capacity. We carried on paying off the mortgage at the same pace. The math was still in out favor, despite getting a significant lower interest rate of 2,7%. In the mean time the savings account produced only 0,05%. Full disclosure , I do not take into account any tax reductions or other tax advantages because they differ for everyone.

At some point I became aware of the fact that nothing in terms of housing was cheaper than any of the alternatives. Including a maintenance provision. All other alternatives like renting or buying a smaller house are more expensive. Even social housing is costs more , which I do not qualify for.

So all other alternatives are pricier. I started wondering if my extra mortgage payments still made sense. Isn’t it better investing these sums in other more liquid investments ? The mortgage will take care of itself in the remaining time the mortgage still has too run.

For me the answer was yes, simple math with a return of 5% gets me more money at the end of the line and the money is available, it’s more liquid.

Isn’t this simply hedging the mortgage against more riskier investments ? Yes it is , I am using the time and the debt in the house too take on more riskier investments. Brings us back too risk, what is the risk ? I live in the house and in the current market there are no opportunities in finding something cheaper. The biggest risk is I can’t afford the mortgage payments anymore. And this would mean finding cheaper housing when that happens, which isn’t available.

It’s now time for kicking my habit of extra monthly payments and the little voice in my head saying , just get rid of the mortgage ! So I am taking these monthly extra payments and putting them in my ETF portfolio. Then at some point , likely faster I will simply have the remaining mortgage sum in liquid investments , which means I could at that point pay it off in full.

A very reasonable risk if you ask me.

Februari 2019 – Option positions

Time for another update on the options trading part of my portfolio. On January the 18th all my options positions endend worthless. Which was fine by me because I wrote them, so all the premium was collected. The total for January is 19,14 , which is not a lot but it’s the first run of the experiment, so I am very cautious.

For the expiration on the 15th of March the following positions have been added. Writing 2 calls on parts of my positions in BAM and Aegon, which will bring in 20 euro’s and some sold puts on Philips. I was a little too late for Februari, so March it was.

I have adjusted the table accordingly for a complete overview of all my trades so far. Now it’s a matter of getting more knowledge about riks and modeling risk in order too get more out of it. For now I will remain at my 100% covered strategy. And as all learning and reading goes extremely slow in my case, this will probably stay that way for a while.

Total for January : 19,14

Date position openOption QuantityPriceTotal amountBuy / Sell End dateTransaction costs
Open/ClosedResult
03-01-2019Ahold Delhaize Put 19.00 18 January 201914,004,00Sell18-01-20190,85Closed3,15
18-12-2108Bam Put 2.20 18 January 201915,005,00Sell18-01-20190,85Closed4,15
5-12-2018Philips Put 29.00 18 January 2019 113,0013,00Sell18-01-20190,85Closed12,15
04-01-2019Aegon Call 4,50 15 March 2019210,0020,00Sell15-03-20191,7Open
07-01-2019BAM Call 3,00 15 March 2019210,0020,00Sell15-03-20191,7Open
22-01-2019Philips Put 24,00 15 March 201917,007,00Sell15-03-20190,85Open
30-01-2019Philips Put 30,00 15 March 2019120,0020,00Sell15-03-20190,85Open

January 2019 – Dividend

Another month has passed, first in 2019, time for another dividend update. Comparing 2019 with 2018 , the January dividend has gone up 50% , mainly because of growth in the portfolio. I don’t know if it’s also down to individual company’s raising there dividends. To be honest I wasn’t too bothered looking it up. Maybe I can muster up some will power the next time round.

It’s still fun watching dividends come in, although I follow the discussion around whether dividend investing is still as viable today as it was in the past with great interest. I think it a bit of a save guard for management not too take too short term decisions , and look more towards stability in growth as opposed too fast growth. Well for me it still works well, and for now I will keep it as part of my investment strategy alongside the ETF part of the portfolio.

Now the numbers :

DateStockCurrencyAmount
23-01-2018
Cisco SystemsEUR8,10
15-01-2018
W.P. Carey IncEUR9,03
10-01-2018
Walt Disney CompanyEUR0,77
09-01-2018
Vanguard FTSE All-World UCITS ETFEUR37,11
02-01-2019NikeEUR1,92
TotalEUR56,93