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.

Fear

Fear, my biggest fear ? Losing control, or more accurate losing the illusion of control. I have always wanted too have as much control over my life as possible. More often than not pushing it too the extreme. Combining this with setting high demands for myself and big goals, I made it quite difficult for myself to really have control. Not in ways of getting towards my goals but controlling myself.

Eventually my biggest fear became reality, I now only have limited control over my life. The daily condition of my brain determines what I can and cannot do that day and it makes for a lot of unexpected moments. Offcourse I do all I can controlling this. It’s my nature.

The difference with the past is I am not trying too force this at all costs. All I can do is plan well , exercise and train well and rest. Controlling everything simply costs too much of my valued and scarce resource , energy.

It had taught me that living in the moment is very valuable, you simply cannot control every aspect of your life. You can work on creating the conditions and environment too increase your chances of achieving your goals, and thats an attitude I recommend too everyone. But in the end you are reliant on so many factors and moments that there is a point at which it simply does not make sense trying to control more. You end up in an illusion, and you keep pushing for more influence on a increasingly smaller effect on the outcome of events.

Energy better spend on fun things in life, or activity’s which you can do in reaching your goals. Not just trying too control everything.

It’s strange how you always fall back on old instincts , which have taken me far in life and still my discipline , controlling nature and perseverance take me far today. But in the past these attributes were in my way a lot of the time. It backfired numerous times when achieving my goals. Controle became a goal in itself. There was no more logic.

Now there is more acquiescence, frustration about my failing brain is still there, and also acceptance is a long way down the line, but this has given me the insight in the simple fact you can better put your energy in little steps towards a goal , the using it too control stuff you can’t. Or obsess over details. Problems will arise anyhow, and when they do , I will deal with them.

My life has a lot more direction and focus , and is more relaxed than it used too be. Everything is a bit smaller, at a lower pace. Unnecessary fear is bad guidance , and working at overcoming this fear is a very valuable side effect too my brain damage. I doubt if I would have ever gotten it otherwise.

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.

Under 3 – Fourth week of training

This week has been a successful one, full training schedule done ! It went very well and although I can’t yet get enough speed this is something that I am working on with extra speed training and short speedy parts during the long runs. But that did not take away the fun , I am very happy I could cope with the Km’s smoothly. No weird pains or sore muscles in between the sessions. Which makes me a very happy person.

Strength training I am still doing via yoga sessions which I like a lot, it’s more tranquil and the continuous movement makes for a more flexible me. Which is an added bonus. Also it is supposed to make you more resilient and thus less prone to injuries. And it makes me more relaxes mentally , which is kind of ideal being me. 4 sessions this week and I am planning to keep this up.

All in all an excellent week. On to the next !

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

Under 3 – Second and third week of training

Another overview of my training activities, or lack thereof. Week 2 was mostly wasted on a food poisoning , which left just two runs in week 2. Week 3 also started in recovery mode which was rather annoying. At the end of the week I managed a few runs , a bit unfortunate but luckily at the beginning of my training plan and not at the end just before a marathon.

Training itself went well, just slightly slower due too overall weakness from the stint of food poisoning. All in all it held me back for a good 8 days.

Happy to be back and looking forward to week 4 !

Debt reduction, it’s not easy.

A lot of people are writing about debt reduction as an easy way of getting the monthly costs down. Which in theory it is.The math is pretty straightforward and if you make a simple spreadsheet the reduction of debt and all it’s benefits become pretty clear. It’s a no brainer really. So you start with a lot of renewed optimism and energy and the first few months fly by. But them the promised big dent in the costs doesn’t happen as fast as you would like , you hang in there but the lure of your wish list , bucket list or some other short term gratification is looming. You start questioning if it’s worth it.

Congrats ! You just arrived at the hard part, sticking with it regardless. This is hard, and it’s not happening at the end it’s when you just got started , and it’s going too happen again. Psychologically all these small steps and keeping the enthusiasm alive is the most difficult part. Because it’s becoming boring. The numbers don’t change magically , the time and effort stay the same no matter how hard you look and your spreadsheet.

But sticking with it really pays off, make a game out of it. Every time you want too spend money on something you don’t really need , step back think again and….

take that amount and pay off some more debt. You get too adjust your spreadsheet and the numbers change. Excitement has returned ! All kidding aside, debt reduction is more of a mind game than a numbers game. Most hard things take a long time , remember your original goal and reason for doing it!

By all means paying off large sums of money is never easy, it is however one of the best decisions you can make in your life. It reduces your financial vulnerability , reduces your monthly cash flow needs, and reduces stress. All very cool benefits. Just hang in there !

January 2019 – Option positions

This year I am planning on learning more about options. In another series on this blog I keep track of my knowledge and in this series I will share my option positions. Mainly because a lot of information is about the theory behind options and calculation examples. Apparently not many actually share the practical side of things, the doing part.

And although theory and calculations are the basis behind it all, it all tends too favor the profit side of things. A lot of examples explain in detail where the profit in the position comes from. The part about the losses and risks is generally just a sentence long. Also the supposed profit margins are always pretty fat. While I enjoy reading about theory and supposed succes. I feel like I am learning a lot more when I am reading about mistakes. And how people adjust and learn from them.

With that in mind I am logging all my option positions each month and what happend with them. The strategy is basic , I am only writing covered calls and puts. I am writing puts on stocks I am planning on buying anyway and write calls on stocks I have in my portfolio. No complicated scenarios as of yet.

It’s a bit of an experiment and I will probably adjust the format of this article series in the future but for now I will make due with this table.

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

2019 goals

A new year and new goals, this will be my first time setting goals , up until now I mostly used to do lists and loosely set goals. Resulting in missing real focus. In turn running up the to do’s on the good old to do list.

First up the finance side of tings. Which can be roughly divided into 2 parts, mostly cost reduction and building wealth. The easiest way for reducing costs is paying off the mortgage which is the only and biggest debt. Last year saw the biggest reduction so far. It’s so easy it’s hard not simply keep on doing it. However I am now at a point which all the alternatives in the market, renting or buying another house will be more expensive. I have no way of living any cheaper. The mortgage needs paying off so I will continue doing the extra payments but the focus needs too be on other more lucrative investments. So the goal for 2019 is paying off an extra 1200 euro’s. That’s it.

Which leaves the other part , my stock and ETF portfolio. A fixed amount will be added each month, divided over ETF’s and handpicked company’s. In which dividend payments will be one of the main factors, as part of my passive income strategy. My goal is getting my dividend payments up too 1500 euro’s per year. In 2018 the total got over a 1000 for the first time, 1021,80. A small milestone. Let’s see if my new goal is achievable.

Something new I got into in 2018 and developed more during the year is options trading. Which turned out too be the suprise of 2018. I used too write options every now and then on stocks I wanted too buy, not really consistent and just for fun. Mostly I didn’t get the stocks and I tried again. After some time I started making this a more systematic approach and I also started writing options on stocks I had in my portfolio.

At the end of 2018 I also started using part of my cash buffers as collateral for writing options. Usually you will have a good idea which part of the buffers you don’t need in the coming month, so it’s pretty safe using a part of this as a way for generating extra returns.

All in all this approach yielded a nice 10,21% return on risked capital. Not shocking in the option trading world but for me an encourachement for learning more about it and applying this in 2019. I will write about my learning process in the option series on this blog.

So 3 finance goals, keep downsizing the mortgage , generate more passive income and enhance the result with option trading.

But without my health all the money is worthless. 2018 has been a year with a few stark reminders of my permanent brain damage. I took on too much in some instances and got into a few nasty periods afterwards. 2019 is all about finding and keeping the balance again and really accept my new me. I can’t keep going on adding more work each time until I crash. The focus will be on being stronger, training the left side of my body and going back too the start of my revalidation process and taking and celebrating small steps forward. I will elaborate more on this in coming blog posts. For now have a very good 2019 !