Tracking SQM, EXEL, Performance, and CSP Candidates - March 17th Update

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I've been on the road quite a bit the past two weeks so have not had an opportunity to write.  Today is my attempt to provide a catch up on what has been happening.

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Update on SQM

I continue to hold 100 shares of SQM and the SQM 042018C55 call.  My cost basis has been lowered and my last blog entry here describes how I have achieved a present cost basis of $52.78, down from the put-to-me level of $55.00.  The $55 call will be bought back at $0.05 if the price drops that low.

Late on 3/15 I rolled the SQM 031618P50 put to the SQM 042018P50 put for a net credit of $1.40.  My basis continues to drop from $53.96 to $53.96 - $1.40 + 0.02 (commissions) = $52.58.  The put will be bought back at $0.05 if the price drops that low, but given the existing price of SQM, I think there is little chance of that happening.

SQM closed at $49.66 on 3/16.

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EXEL was Put to Me

EXEL closed at $24.64 on 3/16 and because I held the $25 put, I now am the proud owner of 100 shares of the stock.  

EXEL just experienced a major drop from $29.50-ish to $23.24 over 5 days and is losing attractiveness for me.  I'd like to get out of the position.  They do not report earnings until late May, so there is no pending earnings report in the next 4 weeks. 

I sold the EXEL 031618P25 contract on 2/16 for $0.47 and collected $0.46 (commission).  The basis for the stock is presently $25.00 - 0.46 = $24.54, so even though the stock was put to me at a supposed loss, I still have a slight paper-profit in the position.

Obligated money ($2500 in this case) needs to work.  My money management rules and win/loss results to date show that I need to collect at least $40 premium to hit or exceed a 12% annualized rate of return, so this opens up selling any call from the April 23 to the April 27.

I want to get out of the position with a high probability of profit, and I want this profit to exceed 12% (annualized).  This means, at a minimum, the return on option needs to be in excess of 0.12 * 35 (days to expiration) / 365 (days in a year) = 1.15% ROO.

If I sell the April 22 call at the bids that are published ($2.65) this weekend, my basis will drop to about $21.89 and I'll make about $0.11 when/if called away.  This is 0.44% on the position and annualizes to 4.6%, and is too small for what I need the money to generate over the next 35 days.

If I sell the April 23 call at the bids that are published ($2.20) this weekend, my basis will drop to about $22.34 and I'll make about $0.66 when/if called away.  This is 2.64% on the position and annualizes to 27.5%.  This has a high probability of occurring and is in my target ROO zone, so I'm seriously considering selling this call on Monday after the open.

Here's the profit and loss for this proposed trade, noting that I want to get out of the trade in April (with a high probability of profit):

Click on the image to enlarge.

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Trades over the Last Two Weeks

Despite not writing, I've been busy placing orders to sell positions.  Here are the tables for both accounts since my last entry:

Click on either table to enlarge.

I sorted each by contract so that you could see what was opened/closed within the past two weeks.  many were bought back (Buy to Close) at $0.05 as the stock price moved away from the option.  Because these are cash-secured puts, the money is then released to sell another put.  

Rinse/repeat.

Here are my holdings going into the open on Monday, March 19th:

I note that the stock position Open P/L% is incorrect, as there is no way to assign premium capture to the underlying when the stock is put to you.  My actual basis for each of the stock positions is lower than indicated (which is the entire purpose of this strategy).

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Performance Since 2/1

I received an email this week asking about performance for the CSP - CC strategy that I'm forward-testing, in real time, for all of you to see.  Here is the equity graph since 2/1/18:

Click on the image to enlarge.

The equity graph is relatively accurate, but I note with some disdain,  TradeStation does not accurately track closed sequences where stocks have been put to you, so the entries of the blog found here (AMAT, MU, SQ) are NOT included in the graph or the performance statistics that follow.  This is a bug that TradeStation users have been dealing with for years, and TradeStation simply does not care to fix.  Frustrating.

Noteable are the following statistics since 2/1:

• 36 trades, 33 are profitable (91.67%)
• Average Winning Trade:  $30.53
• Annualized Rate of Return:  14.3%
• Percent Time in Market:  77%

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CSP Candidates for Monday

Here are candidates that I'm looking at for Monday:

April 20th Monthly OE:

May 18th Monthly OE:

March 23rd Weekly OE:

March 29th Weekly OE:

April 6th Weekly OE:

Click on any table to enlarge.

Note, these are not recommendations for you -- they are simply what I am considering for ME.  You absolutely must do your own due diligence on these, and you must take ownership for your actions.

I note that MIK has an ER in 4 days, so you'll want to look at each of these in that context.

These all meet the following criteria, at least with the market-closed ask/bid pricing:

• My minimum total collected premium requirements between Monday morning, March 19th and the OE date (the duration the money would be tied up);
• Probability of being OTM on OE > 68%
• Minimum annualized return on option (AROO) > 12%, including a $0.05 buy-to-close order and commissions
• Total risk is 10% of portfolio value, or < $7,500 per position.  This is why you see a "1" or "2"  or "3" in the "#..." column, which is the number of contracts to buy to fill a full position.

I also note that these will change after the open, but not by much (generally).  Some may or may not meet the criteria stipulated above just after the open.

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If you see anything wrong in my calculations, please let me know. 

As with all my ramblings, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd