Trying my hand at options trading again in July. [Diversification across multiple stocks]

This is a continuation of the previous article.

Based on the results of the July expiration date, I worked on options trading for the August expiration date. This time, while continuing the covered call strategy for PFE (Pfizer), I am setting up a target buying strategy with a different stock, keeping sector diversification in mind.

As part of my monthly strategy using individual stock options, this is a record of this month's results and the strategy construction for next month.

Record of call selling (PFE)

I will summarize this as a work record as well.
This month, I will also build a covered call position for one month from now.

As I wrote in the previous article, I will not be greedy and will set the strike price at $25 with an August 22 expiration date target.
I compared the call price with the previous article, and it has risen from 0.25 to 0.39. This is because the probability of it becoming in-the-money is high.

I will check the fees.

The order has been completed. It was executed as soon as the market opened.
I had placed a limit order at 0.39, butsince the order book is thin,the call was executed at 0.41.

I will also check the breakdown of the fees.

I confirmed that $38.75, which is $41 minus the $2.25 fee, has been reflected in the options account.
You can see that a covered position has been built in the holdings section.

I will calculate the cumulative yield later.

Comparison of stock candidates for put selling

I will try something new from here.
This time, the stock I have my eye on for put selling isHAL (Halliburton). It is an energy sector stock, a company that handles oil drilling and facility management. I will try to apply atarget buying strategyto HAL.

The reasons for selection are as follows:

• Sector diversification: Diversify portfolio risk by using theenergy sector, which is different from PFE's sector (healthcare). Ultimately, I would like to consider completing all four phases of the business cycle (recession, recovery, boom, and slowdown).

• Price level: Trading in 100-share units is possible at a price in the low $20s per share. This is to balance the position size with the $25 PFE position.

• Liquidity of the options market: There is volume, the order book is thick, and the spread is narrow. Although not as much as PFE, it is a stock that has a reasonable amount.

I experimentally set the strike price at $21.00. When I did PFE, I used a guideline of setting it about 8% below the current price. However, from my experience in earning premiums so far, I feel that it is easier to understand if the option is exercised quickly, so I am trying to set the strike price close to the current stock price.

I also considered other energy sector stocks as candidates, but I did not select them this time.
Other stocks considered as candidates:
KMI (Kinder Morgan): $26.97 (as of 7/23) -> It was the strongest candidate, but I excluded it because I felt the current dividend payout ratio was too high (97.86%).

OXY (Occidental Petroleum): $43.56 (as of 7/23) -> I passed on this because the price level is relatively heavy compared to PFE.
BP
(BP): $33.52 (as of 7/23) -> The price is relatively not bad compared to PFE, but I intentionally excluded it because it is an ADR stock (a UK stock). I was thinking of building a position on 7/21, right after the weekend, but since 7/22 was the timing of HAL's earnings announcement, I decided to execute it after the earnings announcement.

Record of put selling (HAL)

Since I'm at it, let's try trading US stock options with moomoo Securities this time.
Let's open a derivatives (options) account and transfer dollars from the specified account to the derivatives account in advance. Since the target is $21 this time, I need $2100. I converted yen to dollars and then transferred the funds to the derivatives account.

The HAL chart before the opening looks like this. It was hovering around $21. It looks like the above.
Immediately after the 7/22 earnings announcement.

From here, I will press the options button.

From the Options tab > Chain, select the $21 put with an August 22 expiration date.

Select Trade > New,
Buy/Sell > Sell,
Order Type > Market,
Quantity > 1.

Press Confirm.

Order executed.

The $77 order was executed at $57.
I chose a stock that seemed to have high volume, but the price deviated significantly from the limit price.

Check the fees.

As an aside, Webull Securities is $0.02 cheaper at $2.25.

I confirmed that the premium from the put sale is reflected in the account.

This is also an aside, but I will re-check the volume to find out why the market order deviated so much.
HAL's volume looks like this.
The volume for the 8/22 $21 put sale was 1 (meaning just me). I chose this thinking it had high volume, but compared to TSLA or NVDA, it seems to be an unpopular stock. If it doesn't execute, it's pointless, so having too little volume is also a concern.

The market order resulted in a loss, but there is a dilemma where limit orders are too thin to execute.

This month's yield and overall strategy

The record of cumulative yield is summarized in this article. As a recap, I will add the premium earned this time to it.

<In the case of PFE>

For January to April, three rounds of put selling via target buying (after fees) earned
$3.74 + $8.74 + $3.74 = $16.22

. For May, June, and July, two rounds of call selling via covered calls (after fees) earned
$17.75 + $19.75 + $38.75 = $76.25

Total premium from put and call sales
$16.22 + $76.25 = $92.47(after fees).

Considering the addition from premiums, the results are quite good.
The quarterly dividend for July, which is the ex-dividend date, will be added to this. Although PFE's payout ratio exceeds 100%, I expect that they will not cut the dividend for July.

<In the case of HAL>

One round of put selling via target buying starting in July (after fees) earned
$57.00 - $2.29 = $54.71

The recent dividend yield as of the June 4 record date was
3.09%

. However, since I haven't received the dividend yet, I will calculate the yield based only on the premium.

For the record, this month alone, combining two stocks, I have earned a monthly profit of 38.75 + 54.71 = $93.46 against a margin of approximately $4,600.earned a monthly profit of 38.75 + 54.71 = $93.46 against a margin of approximately $4,600 While HAL has a slightly higher yield, the strength of PFE is that dividend income can also be factored in.

As an aside, I find the dividend information on moomoo Securities easy to read, which is to my liking.

Future Plans

I plan to continue under the same conditions for my next verification.

• PFE: Continue covered calls at $25. The same approach applies to the August expiration.

• HAL: Anticipating target buying at $21, monitoring toward the expiration date (8/22).

I am not sure how much risk diversification I can achieve by spreading across stocks, but I will continue with this setup for a while. Once I get used to it, I would like to consider increasing the number of stocks.

Bonus: Referral Link

For those starting option trading, I will leave a link for moomoo Securities here. Please feel free to use it if you like.

I will leave a referral link for Webull Securities here as well. Please feel free to use this too if you like.