Monday morning here. I need to update on last week and use the post to think about what to do tonight.
To be determined whether I erred on Friday. A half hour into the session I had four call positions that were not going to be in the money, all trading for under 5 cents. I had the UPST puts that still had a pulse but were way OTM. Then, there were ZS and DDOG that opened in the money but quickly dropped in value. DDOG was in green for me and SQ, though below strike price was still only slightly below break even. I decided to hold, as even if they got put to me, the price was satisfactory.
I am nearly certain that the puts are not sentient. On the other hand, no more did I turn off the light, than the stock price started to drop and the put prices started to rise. Coincidence???
So, what did I have? Premiums worth 0.26% of portfolio with 17.6% of portfolio tied up in shares covering the calls plus cash securing the puts. Since I held the options through expiration, the premiums stayed in the account. As of close, the shares put to me were down so my gain on all the puts and calls amounted to 0.15% of the port. That annualizes to 50% more than my RMD so I consider it a win.
I think holding was the right call. Whether it works out for me depends on how those shares perform over my holding period. DDOG closed 19.5% above 12-month low, not a screaming buy. ZS closed 16% above 52-week low.
It should be obvious that I cannot/should not double down on the puts. Well, I could. That would bring DDOG to over 19% of the port and ZS to 6.5% if again I get them put to me. I am inclined to sell covered calls on half of the shares and maybe puts 1/4 of the DDOG and 1/2 the ZS, and check out the other stocks in my “Options” watch list to see if anything looks tempting. ZS reports this week so that is a consideration. Had I been paying attention on Friday, that could have tipped me to buying-to-close those ZS puts. Not a good start to September.