2 Months of trading options – My experience

Hey everyone, welcome back to Findependence Canada.

Today’s topic is going to be trading options – and more specifically my experience with them over the past couple of months.

I’ll open up by stating that this isn’t my first foray into options trading, I originally tried to trade some options about a year ago and quickly learned that in a bull market you have to be careful about how much room you leave your stocks to run, specifically when selling covered calls like I have been.

So, while this isn’t technically my first go at it I’d like to think this is a fresh slate and more of a second first chance at setting up an options account.

First off I’ll show you my transactions:

So here’s what I’ve been up to. As you can see I began funding this account on May. 4th 2021 and that I bought up 100 shares of ITP.TO to kick off the spending. A couple days later I also bought 100 shares of SU.TO and more recently I’ve bought some CCO.TO.

All these stocks I plan to only sell covered calls against and collect whatever dividends they may pay in the meantime.

I’m keeping my strategy very very simple and really focusing on not getting greedy and chasing high yield contracts resulting in my shares getting called away – the objective is to keep as many shares as I can for as long as I can and just keep selling short term covered calls against them.

My criteria:

These criteria are in no way set in stone, as I’m still getting a full understanding of what my longer term strategy may be so do not hold me to these moving forward, but! currently what I’m looking for are these few things:

1. An expiration date within 45 days – I’m hoping to continuously collect small premiums within about a month of the current date and just keep snowballing these as though they’re little dividend payments.
2. My second criteria are to set the strike prices ~10% higher than the stock price that day.

That’s really the only criteria I have for now, obviously there will have to be incentive in the form of an options premium to do the trade but I don’t have a number set, I’m still just trying to execute trades and continue to get comfortable with the process without being too picky.

A large holdback for my account for the time being is that iTrade charges me $11.24 for each options trade! I wish I knew someone at iTrade so I could yell at them about this haha. You don’t see these fees being deducted you just see my options premiums after fees in the table above.

Results (so far):

Wow! $133.24 earned in just over 2 months!

These results may not look quite as impressive since CCO.TO is brand new to our account and thus waters down our “total return” because it hasn’t actually had any time to lay any eggs for us just yet. Even still getting an additional 1.63% boost to your investing account every two months is extremely significant in the long run – especially if we can continue compounding these returns and adding more and more stocks to the party.

A very key component to this strategy that I’m keeping a close eye on is how our return from options premiums compares to the dividends received from a given holding over a longer sample size, like a year or two. As a dividend investor if I could have a chunk of my portfolio earning essentially twice the dividends that would greatly speed up our timeline.

Wrap up/ disclaimer:

So there you have it, that’s our first break down of our rebirth into the options trading game. So far I would definitely call it a success but given the sample size we’ll hold off praising ourselves too much.

As always, this is just sharing my experience and I’m in no way qualified to be giving financial advice so please do your own due diligence before getting into investing and especially options trading.

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Thanks for stopping by,

FIC.