Analyzing My Options Trading: A Snapshot of HOOD and Soun Trades

 

Recent Trades Breakdown

December 30, 2024:

1. Sold $SOUN $21 Put 1/3

   • Option Premium: $62

   • Outcome: Got assigned; the share price was at $20.62

   • Analysis: This put was exercised, and I ended up holding the shares at an effective price of $20.62, minus the premium received. This brought my cost basis lower, which is beneficial if the stock appreciates.

2. Sold $HOOD $37 Put 1/3

   • Option Premium: $57

   • Outcome: Expired worthless

   • Analysis: Success! This option expired worthless, and I captured the premium without having to purchase the stock. The stock price remained above $37, making it a profitable trade.

3. Sold $SOUN $19.5 Put 1/3

   • Option Premium: $64

   • Outcome: Expired worthless

   • Analysis: Another win! The stock price stayed above $19.5, and I pocketed the premium without having to buy shares.

January 6, 2025:

1. Sold $SOUN $24 Call 1/10

   • Option Premium: $96

   • Analysis: This covered call strategy is a great way to generate income. If the stock price goes above $24, I'll sell the shares at $24, locking in potential gains if the share price is higher.This is from the earlier put assignment

2. Sold $SOUN $21 Put 1/10

   • Option Premium: $80

   • Analysis: Similar to previous put sales, I earn premium income. I'll need to buy the stock if it falls below $21 by the expiration date.

3. Sold $HOOD $41 Put 1/10

   • Option Premium: $50

   • Analysis: Another premium-earning put sale. If the stock price falls below $41, I'll need to purchase shares at that price.

My Core Strategy: Cash-Secured Puts Rolled into Covered Calls

Most of my trades revolve around selling cash-secured puts. If these puts get assigned, I then roll them into covered calls. Here's how it works:

1. Cash-Secured Puts:

   • I sell put options secured by enough cash to buy the underlying stock if assigned.

   • If the stock price stays above the strike price, I keep the premium.

   • If the stock price falls below the strike price, I buy the stock at the strike price, effectively getting it at a discount (strike price minus the premium received).

2. Covered Calls:

   • If I'm assigned the stock from the cash-secured put, I sell covered calls on those shares.

   • This generates additional premium income while setting a target selling price for the stock.

   • If the stock price rises above the call strike price, I sell the stock at that price, capturing gains plus the premium.

Benefits of This Strategy

• Income Generation: Earn premiums from both the put and call options, providing a steady stream of income.

• Downside Protection: The premiums received from selling puts and calls help offset potential losses.

• Flexibility: If the stock doesn't get assigned, I can sell puts again. If assigned, I can continue generating income through covered calls.

• Reduced Cost Basis: The premiums received lower my effective cost basis, making it easier to achieve profitability.