As I mentioned in my talk before the San Francisco Bay Area Options Group last weekend, my Leap Strangle (see Older Posts) has taken precedence over DITM for the time being, at least until Volatility (i.e., IV) widens. In my talk I showed a table of my family portfolio of Leaps that had a paper (marked to market) return of about 7% for basically four months.
As this Bull market marches onward into its sixth year, I've become more concerned with safety, although, as the results of my personal Leap portfolio show, not only is the safety cushion much wider, but so is the Reward! As explained earlier, the "Cushion" is the money brought in by selling both Leap calls (covered) and puts for a goodly portion of the purchase price of the stock.
Not only do I want to ladder the expiry date of these Strangles (2015, 2106, 2017), but my entry has been almost monthly from just over a year ago; of the 20 different positions I hold, 10 were entered in the last quarter of 2013, four this year.
Adding up the current (paper) profit, of the $81,449 invested in stock, the walkaway profit (if positions were closed out), including dividends, is $19,173 - dividends are $2868 of this total. Despite the sliding scale of entry time, the profit is 23.54%!
Full disclosure - if the trades are done in an IRA, or non-margin account, the result will be less, as one has to include in the cost basis the sequester of funds to buy (if necessary) the stock "put" to one if the stock drops and REMAINS below the put strike price at expiry. 12 of the stocks have an 2015 expiry; a few were rolled up (down) and out to 2016 - 2017 won't be available until October of this year.
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