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”

After a strong two month rally, a pull back is not unexpected especially when it hits a level of resistance. The ASX 200 index is down about 35 points today after briefly touching 4400 as shown in the chart below. Time to sit back and wait for the pull back to run its course before putting on any new trades.

Trade Transactions This Week

No new trades this week.

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. NAB shares rallied a little this week and is trading at $25.19 today. The call options are now worth $1.53.

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 WOW was trading at $26.24. The share price has shot up and today WOW is trading at $28.88 and our put options are barely worth anything now. As we do not need cash to cover new trades, we will just wait for these options to expire on August 30.

For more information about this trade set up, read my June 6 model portfolio update.

Telstra: TLS September $3.51 Call

On June 20, I bought some TLS shares at $3.63 per share and sold to open some TLS Sept $3.51 calls. As expected, TLS shares fell after they went ex-dividend this week. Today the shares are trading at $3.73 and the call options are worth $0.27.

For more information about this trade set up, read my June 20 model portfolio update.

Newcrest Mining: NCM Oct $24 CALL

On July 27, I sold to open NCM October $24 call options for $1.27 when NCM was trading at $23.23. Gold had a massive rally this week giving a strong boost to NCM shares. Today, the shares are trading at  $27.13 and the call option is now worth $3.86.

For more information about this trade set up, read my July 27 model portfolio update.

Iluka Resources: ILU October $8 PUT

On July 27, I sold to open ILU October $8 put options for $0.56 when ILU was trading at $8.51. After a big rally, the share price has pulled back to $9.68 and the put option is now only worth $0.16.

For more information about this trade set up, read my July 27 model portfolio update.

Rio Tinto: RIO September $58 CALL

On August 10, I sold to open RIO Sept $58 call options for $1.28 when RIO was trading at $56.98. As expected, RIO shares pulled back after hitting resistance and are now trading at $52.12 and the call option is now only worth $0.23.

For more information about this trade set up, read my August 10 model portfolio update.

Westfield Group: WDC Oct $10 PUT

On August 17, I sold to open WDC October $10 put options for $0.36 when WDC was trading at $9.76. Since then WDC shares have gone up and is trading at $9.85 today. Our put options are now worth $0.32.

For more information about this trade set up, read my August 17 model portfolio update.

Current Open Position Snapshot

A summary of our open positions is shown in the table below. We now have 3 open put positions and 4 open covered call positions.

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.

Stay tuned!

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.

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