Note to new readers: This is a regular update on the status of our Low Risk Income Model Portfolio which is built using the income strategy described in our e-book “A Low Risk Income Strategy for All Economic Conditions”
With the Greek elections coming up soon on June 17, we will not be putting on any new trades this week. We will just review all our open positions this week.
Model Portfolio Update
Rio Tinto: RIO July $64.00 PUT
On April 18, I sold to open RIO July $64.00 put options for $2.04 when RIO was trading at $66.08. RIO shares at $54.53 are trading at around the same price as last week and our put option is valued at $9.39. Hopefully the share price will find support soon.
For more information about this trade set up, read my April 18 model portfolio update.
Wesfarmers: WES June $29.50 PUT
On April 24, I sold to open WES June $29.50 put options for $0.59 when WES was trading at $29.64. WES was also affected by the stock market correction but like most stocks from defensive sectors, they tend to fall a lot less compared to stocks from the volatile mining and financial sectors. Today WES is trading at $28.97 and our put options have increased in price to $0.75. Our put options are currently ITM and if the price of WES stays below $29.50 on June 26, which is the ASX option expiry date for the month of June, we will be assigned WES shares at $29.50. If that happens we will immediately look to sell covered calls on our shares to generate income while waiting for the next dividend to be paid in September.
For more information about this trade set up, read my April 25 model portfolio update.
Newcrest Mining: NCM July $24 PUT
On May 9, I sold to open NCM July $24 put options for $1.24 when NCM was trading at $24.24. NCM is trading at $24.65 today and our put options have decreased in price to $1.06.
For more information about this trade set up, read my May 9 model portfolio update.
Iluka Resources: ILU July $13 PUT
On May 16, I sold to open ILU July $13 put options for $0.78 when ILU was trading at $13.07. ILU has fallen in price since and is trading today at $11.97. Our put options are now worth $1.12.
For more information about this trade set up, read my May 16 model portfolio update.
National Australia Bank: NAB September $24.01 CALL
On May 30, I sold to open NAB September $24.01 call options for $0.76 when NAB was trading at $23.76. As expected, NAB fell in price after the stock went ex-dividend on May 31. Today NAB is trading at $22.10. Our call options are now worth $0.41.
For more information about this trade set up, read my May 30 model portfolio update.
Woolworth: WOW August $26.00 PUT
On June 6, I sold to open WOW August $26 put options for $0.65 when WES was trading at $26.24. Today WOW is trading at $26.46 and our call options are now worth $0.56.
For more information about this trade set up, read my June 6 model portfolio update.
Current Open Position Snapshot
A summary of our open positions is shown in the table below. We have 5 open put positions and 1 open covered call position.
I will be providing a weekly update on this model portfolio on this blog. If you are intrigued by our income strategy but have trouble following the discussions in this post, you will need to first download and read our e-book in order to understand the strategy and do some basic options education (found on our Resources page) to familiarise yourself with option terminology.
Disclaimer: This post is for educational purposes only and should not be treated as investment advice. This strategy would not be suitable for stock investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek investment advice if required.