A Starting Point: August 31, 2012

I have been actively trading equity options since 1998, beginning with covered call until I built up enough equity to trade naked puts as well. For reasons that I'll eventually get into, I have always exclusively held short options positions.

Beginning in July 2001, I began making my living trading options. In the financial crash of 2008, I was essentially wiped out in my main, non-IRA account, which is something the reader should keep in mind if he chooses to follow my investing strategies. After a couple years back in the working world, I resumed living off of investment income in June 2010.

In order that a live example of my options trading strategies can be followed, I'm going to post trades made to my main non-IRA account. Note that I have income from outside of this account, so I am able to take risks with it that otherwise lead easily to catastrophe. In general, I hope to generate an average of $1,000 a month in cash flow from this account, or a little better than 10% per year, while growing or at least maintaining the account value.

But options trading always has to be considered in the context of an entire portfolio, so to start things out, here are my account positions at the close of trading on August 31, 2012:

    Cash:                             $ 12,287.18
    Accrued Dividends:                      82.70
    Stocks:                            110,606.66
    Options:                            (8,939.31)

  Account Value:                      $114,037.23

  Equity:                             $122,995.54
  Margin Requirement:                   68,797.67
  Available Funds:                      54,197.87

  Regulation T Margin Requirement:      94,941.99
  Special Memorandum Acct:              43,637.69

  Pos   Symbol/Name                      Price      Value

  400 ARCC ARES CAPITAL CORP  17.27  5,908.00
   -4 ARCC 22SEP12 16.0 C                1.30  (519.80)
(  09/11/2012  +4 ARCC 22SEP12 16.0 C     1.70      680.04    )
(      Post-August Profit/(Loss):                  (160.24)   )

  400 BMY BRISTOL-MYERS SQUIBB CO  33.01  13,204.00 
   -4 BMY 22SEP12 34.0 C  0.13  (53.43)
(  09/21/2012  +4 BMY 22SEP12 34.0 C      0.00        0.00    )
(      Post-August Profit/(Loss):                    53.43    )

 1000 GE GENERAL ELECTRIC CO  20.71  20,710.00 
  -10 GE 22SEP12 20.0 C  0.83  (827.26)
(  09/19/2012  +10 GE 22SEP12 21.0 C      2.49    2,473.49    )
(      Post-August Profit/(Loss):                (1,646.23)   )

  200 RIG TRANSOCEAN LTD  49.03  9,806.00 
   -2 RIG 22SEP12 50.0 C  1.12  (224.17)
(  09/21/2012  +2 RIG 22SEP12 50.0 C      0.00        0.00    )
(      Post-August Profit/(Loss):                   224.17    )

CE CELANESE CORP  38.26
   -3 CE 22SEP12 30.0 P  0.01  (3.72)
(  09/21/2012  +3 CE 22SEP12 30.0 P       0.00        0.00    )
(      Post-August Profit/(Loss):                     3.72    )
 
EMR EMERSON ELECTRIC CO  50.72 
   -2 EMR 22SEP12 35.0 P  0.00  (0.01)
(  09/21/2012  +2 EMR 22SEP12 35.0 P      0.00        0.00    )
(      Post-August Profit/(Loss):                     0.01    )

NSC NORFOLK SOUTHERN CORP  72.46 
   -2 NSC 22SEP12 60.0 P  0.00  (0.59)
(  09/21/2012  +2 NSC 22SEP12 60.0 P      0.00        0.00    )
(      Post-August Profit/(Loss):                     0.59    )

V VISA INC  128.25
   -1 V 22SEP12 90.0 P  0.00  (0.00)
(  09/21/2012  +1 V 22SEP12 90.0 P        0.00        0.00    )
(      Post-August Profit/(Loss):                     0.00    )


  300 WAG WALGREEN CO  35.76  10,728.00 
   -3 WAG 20OCT12 33.0 C  3.14  (940.89)

DD DUPONT AND CO  49.75
   -2 DD 20OCT12 40.0 P  0.10  (20.29)

INTC INTEL CORP  24.83
   -5 INTC 20OCT12 25.0 P  0.99  (494.90)

SNDK SANDISK CORP  41.22
   -3 SNDK 20OCT12 35.0 P  0.55  (164.04)

STX SEAGATE TECHNOLOGY PLC  32.01
   -4 STX 20OCT12 28.0 P  0.76  (303.14)

UPS UNITED PARCEL SVC INC          73.81
   -2 UPS 20OCT12 60.0 P  0.06  (12.47)

COP CONOCOPHILIPS  56.79
PSX PHILLIPS 66  42.00
   -2 COP1 17NOV12 60.0 P  0.22  (43.43)

HES HESS CORP  50.53
   -3 HES 17NOV12 40.0 P  0.48  (145.47)

MDT MEDTRONIC INC  40.66
   -4 MDT 17NOV12 29.0 P  0.11  (44.41)

CREE CREE INC  28.20 
   -5 CREE 22DEC12 15.0 P  0.14  (68.97)

DOW DOW CHEMICAL CO  29.31
   -4 DOW 22DEC12 25.0 P  0.62  (248.12)

NE NOBLE CORP  38.14 
   -3 NE 22DEC12 30.0 P  0.66  (199.08)

POT POTASH CORP  41.07 
   -3 POT 22DEC12 32.5 P  0.50  (150.20)

TIE TITANIUM METALS CORP  12.24
   -5 TIE 22DEC12 10.0 P  0.29  (142.82)

TM TOYOTA MOTORS CORP  79.62
   -2 TM 20OCT12 55.0 P  0.01  (2.47)

  200 CSE CAPITALSOURCE INC  6.93  1,386.00 
   -2 CSE 19JAN13 7.0 C  0.43  (85.02)

  200 PG PROCTER & GAMBLE CO  67.19  13,438.00 
   -2 PG 19JAN13 67.5 C  2.04  (408.53)

  400 WM WASTE MANAGEMENT INC  34.58  13,832.00 
   -4 WM 19JAN13 37.0 C  0.41  (164.21)

CMI CUMMINS INC  97.11
   -2 CMI 19JAN13 45.0 P  0.21  (42.14)

HON HONEYWELL INTL INC  58.45
   -3 HON 19JAN13 40.0 P  0.38  (114.47)

MMM 3M CO  92.60
   -2 MMM 19JAN13 55.0 P  0.13  (26.60)

UTX UNITED TECHNOLOGY CORP 79.85
   -2 UTX 19JAN13 50.0 P  0.41  (82.69)

A AGILENT TECHNOLOGIES INC         37.16
   -4 A 16FEB13 25.0 P  0.49  (194.81)

CAT CATERPILLAR INC  85.33
   -2 CAT 16FEB13 60.0 P  1.13  (226.38)

PH PARKER-HANNIFIN CORP  79.98
   -2 PH 16FEB13 60.0 P  1.69  (337.73)

STT STATE STREET CORP  41.60
   -3 STT 16FEB13 30.0 P  0.57  (169.59)

IR INGERSOLL-RAND PLC  46.76
   -4 IR 16MAR13 25.0 P  0.31  (125.13)

JPM JPMORGAN CHASE & CO  37.14
   -4 JPM 16MAR13 25.0 P  0.54 (215.80)

UNH UNITEDHEALTH GROUP INC  54.30
   -3 UNH 16MAR13 40.0 P  0.95  (283.94)

  400 VZ VERIZON COMM INC  42.94  17,176.00 
   -4 VZ 20APR13 43.0 C  2.04  (815.63)

LOW LOWE's COMPANIES INC  28.48
   -5 LOW 20APR13 20.0 P  0.56  (278.17)

MAR MARRIOTT INTL INC              37.68 
   -4 MAR 20APR13 29.0 P  1.05  (418.42)

  200 TSM TAIWAN SEMI-SP ADR  14.70  2,940.00 
   -2 TSM 18JAN14 15.0 C  1.70  (340.37)

   34 DYNIQ DYNEGY INC  0.49  16.66 

  100 FTR FRONTIER COMM CORP  4.62  462.00