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| Jan 6 10 |
64.40 |
BTC 5 NAKED PUTS APR 55 @ .28 |
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13.25 |
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(153.25) |
4122.75 |
| Mar 18 10 |
64.60 |
Sold 5 Naked Puts Apr 65 @ 1.20 |
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13.25 |
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586.75 |
4709.50 |
| Mar 18 10 |
65.00 |
BTC 5 NP Apr 60 @ .09 |
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13.25 |
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(58.25) |
4651.25 |
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Mar 22 2010: This has been an excellent trade and an
excellent chart pattern. JNJ has climbed over a
period of a year from around $50.00 to $66.00 a rise
of 32%. During the same period my return has been
about 15%. Has I been more aggressive and sold at
the money or even slightly in the money puts, the
return may have been higher. As is the case with
many naked put positions or covered call positions
during rising markets, the option position will not
garner as much as just buying and holding the stock.
The problem with buy and hold is that it is based on
the investor buying at the bottom and selling at the
top. Not many investors will have done that during
this time period and how many will have sold prior
to this point, fearing that the stock is going to
fall back? This is the dilemma with buy and hold -
when to buy and when to sell? Meanwhile I have
generated about half of the rise in JNJ without ever
owning any shares, thereby allowing my capital to be
used for additional naked puts or invest in a daily
interest account (which I would not do for 1%). With
JNJ now back to its midrange between 60 and 70 (see
the original chart at the top of this page), JNJ may
be on the verge of testing the low 70's. At this
stage I will stay around the 65 level for naked
puts. Looking at the past years, the stock could
easily stay in the range of 60 - 70 for some time.
The fall in early 2009 was very dramatic for JNJ and
probably unwarranted based on the strength of the
company, its earnings, consumer market share, and
dividend. Basically it was a bargain back in early
2009, but then so were most stocks. My strategy now
will be to sell Naked Puts (unless assigned), and
when the value decreases enough, I will buy back the
put and roll to the next month. I will not be
surprised to find I am at the 65 level for a few
months or possibly longer. If I can earn enough
income I may even pick up a few shares to write
calls against (maybe, but as I love options,
unlikely)
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| Apr 17 10 |
65.02 |
Expiry: 5 Naked Puts Apr 65 expired
(just barely!) |
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| Apr 17 10 |
65.02 |
Sold 5 Naked Puts May 65 @ 1.25 |
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13.25 |
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611.75 |
5263.00 |
| Apr 27 10 |
64.80 |
BTC 5 Naked Puts May 65 @ .90 |
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13.25 |
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(463.25) |
4799.75 |
| Apr 27 10 |
64.33 |
STO 5 Naked Puts Jun 65 @ 1.87 |
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13.25 |
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921.75 |
5721.50 |
| May 28 10 |
58.40 |
STO 5 Naked puts Jul 52.50 @ .53 |
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13.25 |
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251.75 |
5973.25 |
| Jun 8 10 |
57.90 |
STO 5 Naked Puts Oct 50.00 @ 1.06 |
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13.25 |
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516.75 |
6490.00 |
| Jun 18 10 |
59.18 |
Expiry" BTC 5 NP JUN 65 @ 5.91 |
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13.25 |
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(2968.25) |
3521.75 |
| Jun 18 10 |
59.18 |
STO 3 Naked Puts OCT 65 @ 6.60
Comments: See my comments for Jun 18 2010 below. |
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10.75 |
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1969.25 |
5491.00 |
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Jun 18 2010: The past month has not been kind
to JNJ. The "flash crash" of May 6 2010 started it all and the
stock fell far below the flash crash price. On Jun 1
the stock traded at a low of 57.55 and JNJ has been
in the doldrums ever since. What a great opportunity
to sell out of the money naked puts. The 200 day
moving average was just above 63 when the stock
began to turn down. This is a fabulous company and I
want to take advantage of this downturn to sell more
naked puts. Meanwhile today my June 65 naked puts
ended up in the money. Why get assigned when the
goal is to keep generating income until I have to
finally accept assignment when there is no premium
left. Instead there is plenty of premium and I
decided to split my 5 naked puts for Jun 65 into 3
for Oct 65 and 2 for Jan 65. Both have very good
premiums. This has added an additional 544.75 to my
income. If I can roll again next year and generate
another 500.00 it will have been very worthwhile.
Meanwhile I am holding Oct 50 and Jul 52.50 naked
puts. I will also sell some August puts at these
levels. I will not be surprised to see this stock
recover back to 65. If that occurs I will roll out
again if options premiums are decent. Meanwhile
though, my share price valuation is down to $51.14
and continues to decline. Every roll of my puts
continues to generate income and reduce my share
valuation price.
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| Jun 18 10 |
59.18 |
STO 2 Naked Puts Jan 65 @ 7.70 |
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9.50 |
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1530.50 |
7021.50 |
| Jul 16 10 |
59.44 |
Expiry: 5 NP JUL 52.50 expired |
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7021.50 |
| Jul 16 10 |
59.44 |
STO 5 NP AUG 57.50 @ .70 |
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13.25 |
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336.75 |
7358.25 |
| Jul 23 10 |
57.10 |
STO 5 NP SEP 55.00 @ .90 |
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13.25 |
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436.75 |
7795.00 |
| Aug 20 10 |
58.57 |
Expiry: 5 NP Aug 57.50 expired |
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7795.00 |
| Aug 20 10 |
58.57 |
STO 5 NP OCT 55 @ .72 |
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13.25 |
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346.75 |
8141.75 |
| Sep 16 10 |
61.15 |
BTC 5 Naked Puts Oct 50 @ .05 |
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13.25 |
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(38.25) |
8103.50 |
| Sep 17 10 |
61.42 |
STO 3 NP APRIL 57.50 @ 2.25 |
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10.75 |
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664.25 |
8767.75 |
| Sep 17 10 |
61.57 |
Expiry 5 NP Sep 55 expired |
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8767.75 |
| Sep 17 10 |
61.57 |
BTC 4 Naked Puts Oct 55 @ .10 |
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12.00 |
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(52.00) |
8715.75 |
| Sep 17 10 |
61.57 |
STO 2 Naked Puts Oct 62.50 @ 1.49
COMMENTS: With the chart below (see Sep 17) JNJ may be on an
uptrend. Instead of buying stock I have decided to sell an
in the money put. I am already holding Oct 65 naked puts
which I plan to roll until I cannot roll further. |
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9.50 |
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288.50 |
9004.25 |
| Sep 17 10 |
61.57 |
STO 4 Naked Puts JAN 57.50 @ 1.25 |
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12.00 |
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488.00 |
9492.25 |
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Sep 17 2010: JNJ is back
in an uptrend. How long it will last is difficult to
say but all the indicators are that there is still
some room on the uptrend although looking at the
Bollinger Band, the stock is pulling slightly away
from the upper band but right now for me, this is
nothing to be concerned about. Imagine if over the
next month or two the stock got back up to $65.00.
Wouldn't that be nice. I have closed my October 50
and 55 puts to free up some capital for some more
aggressive put writing.
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| Sep 17 10 |
61.57 |
Expiry 5 NP Sep 55 expired |
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| Oct 11 10 |
63.15 |
STO 5 NP NOV 60 @ .40 With a delta of
-0.09 and low volatility this could be a safe bet for Nov
options expiry. |
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13.25 |
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186.75 |
9679.00 |
| Oct 11 10 |
63.23 |
BTC 3 NP OCT 65 @ 1.83
COMMENTS: This was an excellent trade. I originally sold
these puts Jun 18 at 6.60. I have closed them today for
1.83. The profit was 72%. These will be rolled out further
in time again. |
10.75 |
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(559.75) |
9119.25 |
| Oct 11 10 |
63.23 |
STO 3 NP APRIL $65.00 @
4.55
COMMENTS: I have rolled from Oct 65 to April. 7 months out
in time. Looking at 65.00 might be quite a stretch for JNJ
when compared to the past year. However just like when I
sold the Oct 65 put in June, I am not looking for the stock
to make it beyond $65. I am looking for the stock to stay
within the same range of between 59.00 and 63 or 64.00 which
means this put will lose premium as April approaches
allowing me to roll yet again. Meanwhile though should JNJ
sell off and move back below 60.00 I would consider buying
back this put and rolling further out in time again. The who
concept here is to keep rolling the put and earn income
which eventually can be used to pay for the stock, just as I
did with Kraft. |
10.75 |
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1354.25 |
10473.50 |
| Oct 15 10 |
63.57 |
Expiry: 2 NP Oct 62.50 expired |
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| Oct 15 10 |
63.57 |
STO 2 NP NOV 62.50 @ .73 |
1.1 |
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9.50 |
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136.50 |
10610.00 |
| Oct 19 10 |
62.70 |
STO 3 NP DEC 60 @ .79
COMMENTS: With today's weakness I sold 3 NP for DEC 60. If
the market sells lower I will sell more puts on JNJ. |
1.3 |
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10.75 |
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226.25 |
10836.25 |
| Nov 10 10 |
63.90 |
BTC 2 NP NOV 62.50 @ .18 |
(0.28) |
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9.50 |
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(45.50) |
10790.75 |
| Nov 10 10 |
63.90 |
STO 2 NP JAN 62.50 @ 1.15 |
1.8 |
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9.50 |
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220.50 |
11011.25 |
| Dec 17 10 |
62.54 |
Expiry 3 NP DEC 60 expired |
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DEC 17 2010:
With the present uptrend my 3 Naked puts Dec 60 expired. I
sold 2 naked puts Jan 2012 $60 strike for a 7.6% return.
These 2 long put contracts help to fill in the year and free
up some capital for puts next months if, as I expect my Jan
57.50 puts all expire. I am not sure about the other Jan
naked puts. I will then take the released capital and spread
it out throughout the various months in 2011. I remain very
comfortable at $57.50. The Jan 2012 60 puts with a premium
of over 4.00 offer enough protection in the event that JNJ
falls below 60.00 by year end. I doubt I hold these 2 puts
the entire year. If the stock rises and the premium
disappears I will buy and close them early. Meanwhile
looking at the below chart it is obvious the uptrend has
ended for now but the stock is more in a sideways trend,
rather than clearly down.
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| Dec 17 10 |
62.54 |
STO 2 NP JAN 2012 60.00 @ 4.60 |
7.6 |
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9.50 |
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910.50 |
11921.75 |
| Dec 31 10 |
61.85 |
BTC 2 NP JAN
$65.00 @ 3.10 |
4.7 |
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9.50 |
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(629.50) |
11292.25 |
| Dec 31 10 |
61.85 |
STO 2 NP FEB $65.00 @ 3.55
COMMENTS: This is a roll from Jan to Feb to continue
bringing in more premium. I would not roll out further, in
case the stock should move higher which would decrease the
premium in the Feb put and increase premiums should I roll
further out in time. |
5.4 |
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9.50 |
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700.50 |
11992.75 |
| Dec 31 10 |
61.85 |
BTC 4 Naked Puts JAN $57.50 @ .08 |
0.13 |
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12.00 |
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(44.00) |
11948.75 |
| Dec 31 10 |
61.85 |
STO 4 Naked Puts FEB $60 @ .75 |
1.25 |
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12.00 |
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288.00 |
12236.75 |
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END OF 2010 - EARNINGS - $7960.75 =
9.8% |
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