Possible New Trades

Fellow Traders,

OK, I promise this is my last post of the day.  Four in one day is enough.  In this post I want to share a few of the trades I’m considering in the week coming up.

First, is Freeport-McMoRan Copper and Gold (FCX).  It closed Friday at $31.81.  Over the past two years it has bounced off of support at $30 twice.  The JUN $30 puts are at $0.94 bid.  The $29 puts are at $0.69 bid.

Second, is British Petroleum (BP).  It closed Friday at $37.10.  Other than during its Gulf of Mexico crisis a couple of years ago it has exhibited good support at $35.  The $34 put is at $0.40 bid.  My buddy Ed didn’t have much good to say about BP so I’m leary of this one.  However, someone who likes BP might find this to be a good trade.

Last, but certainly not least is Applied Materials (AMAT).  Some of you may recall I traded this one at the beginning of the year.  In that trade when AMAT was at $10.21 I sold the JAN13 $10 puts at $1.57.  One month later I bought to close the puts for $0.75.  AMAT is now back down $10.36.  The JAN13 $10 put is at $1.07 bid.  I like AMAT at $10 or less.  With this trade I make over 10% ROIC if I don’t have the stock put to me.  If I do have the stock put to me at $10, I will own it at a net cost of $8.11 (10 + 1.57 – 0.75 + 1.07).  With an annual dividend of $0.36 and a net cost of $8.11 I would own AMAT with a dividend yield of 4.4%.  I like this trade.

Other stocks I’m keeping my eye on if the market continues lower include: WM, INTC, ADI, GLW, WAG, and MCD.

Regards,

Troy

 

Update – VXX

Fellow Traders,

I want to give you an update on my naked put trade on VXX.  I initiated this trade back on 2/29, selling the MAR $22 puts when VXX was over $24.  Since  then VXX has dropped to as low as $15.84.  I’ve continued to roll my puts, first to APR, then MAY.  Last week, although VXX has recovered substantially, it still looked like it was going to stay under $22.  Consequently, I rolled the MAY $22 puts out and down to the JUL $21 for a net credit of $311.05.  As it turned out I rolled a couple of days early.  VXX closed Friday at $22.36.  However, since I don’t posess the ability to see into the future, I’m still happy with my trade.  In just under three months I’ve taken in $1318.17 in premiums against my capital requirement of $11,000.

Regards,

Troy

Update – Silver Wheaton (SLW)

Fellow Traders,

Here’s another update, this time on my position in Silver Wheaton (SLW).  You’ll recall I entered this trade on April 27th by buying 200 shares of SLW at $30.07 and selling two MAY $29 puts at $0.64.   This was my second trade using Ron Groenke’s new “Show the Trade”.  Like my CVX trade, it isn’t working out too well right now.  As a matter of fact I’ve already hit the stop loss limit on my long stock.  Back on May 7th the stock fell through my stop loss at $28.56.  By the time I sold it was at $27.45.  It subsequently fell to as low as $22.94.  It has since recovered a little, closing Friday at $24.63.  Thus, my use of a stop loss benefitted me greatly on this trade.

Like my CVX trade I decided to roll out and down my short puts.  On Friday I rolled my MAY $29 puts out to the SEP $28 puts for a net credit of $129.65.  This now leaves me a net loss of $293.40.  My plan is to continue to roll the puts as necessary to bring the whole trade to a profitable conclusion.

Here’s a current 1-year chart for SLW.

Update – Dividend Superstar – Chevron (CVX)

Fellow Traders,

It’s been a couple of weeks since my post.  A lot has happened to my positions since then.  So today I hope to update you on all of them and also tell you about some possible trades I’m looking to set-up next week.

First up is an update on my CVX trade.  As you’ll recall CVX is my very first trade using Ron Groenke’s new “Show the Trade” functionality in his VISIONS software.  As luck would have it my first trade is not going as well as I’d hoped.  Back on April 26th I bought 100 shares of CVX at $105.59 and sold an additional MAY $105 put at $2.02.  You can read my initial write-up here: http://troysmoneytree.wordpress.com/2012/04/26/new-trade-dividend-superstar-chevron/.

The objective of this trade is to sell CVX at $114.04 or better and to have the put expire OTM.  The stop loss on the stock portion of the trade is $97.14.

Friday, the stock closed at $98.46.  To avoid assignment of the stock at $105 I rolled the MAY put out and down to the SEP $100 strike for a net credit of $119.85.  CVX was trading at around $101 when I rolled the put.  Late in the trading session the market fell apart and so did CVX.   To break-even on the whole trade I need to sell CVX at $102.46 or better.

My path forward is clear.  I will honor my stop loss at $97.14 on my long stock position.  However, I intend to roll the put as necessary to exit the position with a gain.  Below is a current 1-year chart of CVX.

Regards,

Troy

What Others are Trading – May 2012

Fellow Traders,

My apologies, I believe I forgot to post an April edition of this post.  Let’s hear them, what trades have been working well for you, and maybe something that isn’t working out quite the way you planned?

Regards,

Troy

Weekly NP Strategy – 05/11/2012 Expiration

Fellow Traders,

It’s that time of the week again.  My plane landed on time and I’m home and able to post my message about what I found in our Weekly NP Strategy query.  This week our query returned 75 possible trades.  Of these I think 3 of worthy of further consideration.  They are IDCC at the $25 strike, NVDA at the $12 strike, and RIG at the $48 strike.

IDCC sold off big earlier this week after missing anlaysts expectations.  NVDA is nearing support at $12, and RIG looks like a bargain at $48.

As always do your own due-diligence.

The remainder of the possible trades can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

New Trade – SLW

Fellow Traders,

Believe it or not I placed another new trade today.  Hard to believe isn’t it.  My trading had slowed way down.  Primarily for two reasons, (1) I didn’t trust the market, and (2) everything I wanted to trade had run up in price beyond what I was willing to own it at.

So, what changed?  Well, to be honest, nothing really.  I still don’t trust this market and there just isn’t much that I like at these prices.  However, I finally said I have to do something, I can’t keep all of my money in cash, not if I want to reach my retirement goals.  So, I decided to give Ron Groenke’s new trading system a try.  As I mentioned in my post yesterday, Ron has had great success with his new “Show the Trade” algorithms.  Having used Ron’s VISIONS software for the past several years, and having met him personally, I trust that he knows what he is doing.

So, I’m ‘sticking my big toe in the water’ so to speak and seeing if I can replicate Ron’s results in my own trading.  Yesterday, was my first “Show the Trade” trade in Chevron (CVX).  Today, it was Silver Wheaton (SLW) that flashed a buy signal so since I’d successfully traded it before and was comfortable owning it at these prices I decided to give it a go.

Here are the trades I executed.

(1) Bought 200 shares SLW at $30.07

(2) STO 2 MAY $29 puts at $0.64

Here is the one year price chart for SLW.  As you can see it has strong support in the $28-$29 range.

Well, there you are, two trades in two days.  I must be losing my mind (ha ha).  Time will tell if I can replicate Ron’s success.  Have a great weekend.

Regards,

Troy

New Trade – Dividend Superstar – Chevron

Fellow Traders,

I executed a two-part trade in my dividend superstar stock Chevron (CVX) today.  Here are the two trades I executed:

(1) Bought 100 shares CVX at $105.59

(2) STO 1 MAY $105.00 put at $2.02.

Some of you may have immediately noticed that I bought CVX without an accompanying short call position, but that I did sell a put.  Why did I do this?  Well let me tell you.  It’s because this is my first trade using Ron Groenke’s new “Show the Trade” functionality in his VISIONS software.  Ron has developed a mathematical algorithm designed to alert you to when the best possible time is to buy a stock for a quick gain.

Ron’s results in trading these short term buy/sell signals has been outstanding to say the least.  So much so that I decided I needed to try it myself.  I decided my first trial needed to be on a fairly conservative, blue-chip kind of stock.  What better choice than one of my dividend superstars, and more specifically a mega-cap, multi-national company like Chevron.

Below you can find a 1-yr chart of Chevron from Ron’s VISIONS software which shows the buy/sell recommendations from the past year.

Following the previous buy/sell signals for CVX from Ron’s “Show the Trade” algorithm over the past 12 months would have resulted in a gain of 28.44% in 3 trades.  It’s important to note that Ron’s program is not designed to predict every turn up or down in the stock.  It gets you into the trade when it appears the stock is ready to run up but then gets you out after a predetermined gain so you don’t stay in it too long and then end up giving back your gains.  It also gets you out at a predetermined loss if the trade is not going as planned or predicted by the algorithm.

The software generated the buy signal yesterday after the market close.  CVX had closed at $103.85.  The stock opened this morning at $104.00 and never looked back.  By the time I could place my trade during lunch it was over $105.00.  It closed today at $106.22.   The put I sold at $2.02 closed the day at $1.63.

Regards,

Troy

Weekly NP Strategy – 050412 Expiration

Fellow Traders,

I’ve got 2 out of 81 possible trades for your consideration this week.  They are ANF and APC.  I’ve suggested ANF previously with mixed results.  I believe once it finished ITM but was an easy work out by selling the next month’s ATM covered call.  This week the $48 put looks good with 5.68% DSP and 0.79% ROIC.

I also like the looks of APC.  However, caution is advised with it because it announces 1st quarter earnings next week.  The $70 put has 6.11% DSP and 0.56% ROIC.

The other 79 trades meeting our screen criteria can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

Update – EXC

Fellow Traders,

I wanted to give you an update on my position in EXC.   My last update was about 4 months ago.  You can read it here: http://troysmoneytree.wordpress.com/2012/01/03/new-trade-exc/.  I initiated a long-term position in EXC back in April of 2010.  My objective in this position is to over time accumulate enough shares such that the quarterly dividends will provide a portion of the income I need in retirement.

Since I initiated the position I have periodically sold covered calls and naked puts to generate income off the position and to accumulate additional shares when EXC falls to a favorable price.  Initially I was taking the dividends in cash but recently I’ve began to reinvest them in additional shares.  This should allow me to acquire a substantial number of additional shares over the next 10 years.  Currently, I own 507 shares.

Last month I sold 3 APR $38 puts for $0.45.  EXC for the first time in quite a while fell below $38.  Thus, I chose to roll my puts out into MAY.  I did this by buying to close (BTC) the APR puts for $0.30 and selling to open (STO) the MAY puts for $0.85.  This resulted in a net credit of $153.43 further reducing my average cost in EXC to $35.65.

To date I have had my position in EXC for just over two years.   During that time my total cash returns have been $2,691.28 (net of commisions). This gives me a ROIC of 28.31%.  Annualized this comes out to 14.06%.

I hope to be able to replicate this strategy with other blue-chip, high dividend companies once they come into my buying range.  Other companies I’d like to implement this strategy with include AT&T (T), Intel (INTC), and Wal-Mart (WMT).

Regards,

Troy