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

Weekly NP Strategy – 04/13 Expiration

Fellow Traders,

My apologies for being out of touch for the past couple of weeks.  I’ve been very busy at work.  I did finally have time this evening to run the Weekly NP Strategy scan.  This week the scan returned 37 trade opportunities.  While I must admit I didn’t have time to do much in the way of due-diligence, one did catch my eye.

Once again it was a trade in VXX.  This time I like the $16 strike.  VXX has been rising for the past several days after bottoming a couple weeks ago at $15.57.  This $16 strike closed today at $0.13 bid.

This trade is not without significant risk.  Proceed with open eyes.

The other 36 trades can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

 

 

Update – HGT

Fellow Traders,

I want to update you on my covered call trade in Hugoton Royalty Trust (HGT).  Yesterday, I closed out this trade at a substantial loss.  However, my dismal result was entirely preventable.  I made a couple of mistakes usually attributed to ‘newbies’, not guys like myself who have been trading and investing for 30 years.  You’d think after this long I would be immune to such bone-headed moves.

You may recall that I successfully traded HGT on 2 previous occasions.  This third time was looking to be equally successful before I made my mistakes.    Back in March 2011 I bought 500 shares of HGT and sold AUG calls.  These calls expired OTM and I sold another round of NOV calls.  These too expired OTM.  Shortly after the NOV expiration HGT began to trade a little lower.  I continued to keep an eye on it so I could sell another round of calls 4-6 months out.

Mistake #1 was not keeping up on what was going on in the natural gas market.  Natural gas prices have fallen sharply in recent weeks.  They now trade at generational lows.  Mistake #2, since my position in HGT was a trade and not a long-term holding, I should have exited the postition when HGT approached my break-even price.  Mistake #3 came a week or so ago when I compounded my problems by buying more shares thinking the stock couldn’t fall much further.  How many times have you heard “never try to catch a falling knife”?

After finally coming to my senses yesterday I sold my 1,000 shares of HGT for a sizable loss.  A loss of almost $3,700!  It is mistakes like that that wipe out the returns on many great trades.

Word to the wise…do NOT let small losses turn into big ones.  Admit your mistake in the trade and get out.

Am I going to swear off HGT and never trade it again?  No way!  I made some mistakes but the strategy is still sound.  Once HGT does find a bottom I will be back in it again collecting its monthly dividends and selling covered calls.

Regards,

Troy

 

 

Dividend Superstars

Fellow Traders,

I have updated my blog to include a new page listing the companies which meet my “Dividend Superstars” criteria.  You will find that page here: http://troysmoneytree.wordpress.com/dividend-superstars/.

On that page you will find that I have segmented the companies into three categories; Champions, Contenders, and Challengers.  Definitions for the categories and further details on the selection criteria can also be found on the new page.

Also, on my page you will find a link to my trading plan page.  However, I have not yet had time to update that page to include details on my new Dividend Superstar trading strategy.  The page requires a total rewrite because it includes a lengthy discussion of the newly retired Deep OTM NP Strategy as well as other dated material.  I will post another message when I get it rewritten.

Regards,

Troy

Weekly NP Strategy – JAN 6 Expiration

Fellow Traders,

Our weekly NP Strategy screen identified 47 possible trades with a January 6 expiration.  Of these I found two that I think are worthy of your consideration.  They are trades in Abercrombie & Fitch Co (ANF) and Cleveland-Cliffs Inc Co. (CLF).

Here are the specifics for the two trades.  I’m late in getting this posted so the bid prices may no longer be accurate.  Be sure to double check prices if you decide to execute either one of these trades.

(1) ANF at $48.74 sell the $46 strike at $0.34 for 0.69% ROIC (36.37% annualized) with 6.32% DSP

(2) CLF at $62.39 sell the $57.50 strike at $0.31 for 0.54% ROIC (28.11% annualized) with 8.33% DSP.

Note: for the more adventurous among you, CLF also has a good trade at the $60 strike.  This is right at recent support levels.

Happy New Year!

Regards,

Troy

 

 

Merry Christmas!

“The angel said to her, “Do not be afraid, Mary, for you have found favor with God.  And now, you will conceive in your womb and bear a son, and you will name him Jesus.  He will be great, and will be called the Son of the Most High, and the Lord God will give to him the throne of his ancestor David.  He will rule over the house of Jacob forever, and of his kingdom there will be no end.”  Luke 1:30-33 NRSV

“In those days a decree went out from Emperor Augustus that all the world should be registered.  This was the first registration and was taken while Quirinius was governor of Syria.  All went to their own towns to be registered.  Joseph also went from the town of Nazareth in Galilee to Judea, to the city of David called Bethlehem, because he was descended from the house and family of David.  He went to be registered with Mary, to whom he was engaged and who was expecting a child.  While they were there, the time came for her to deliver her child.  And she gave birth to her firstborn son and wrapped him in bands of cloth, and laid him in a manger, because there was no place for them in the inn.”  Luke 2:1-7 NRSV

 

Deep OTM NP Strategy – OCT Results

Fellow Traders,

Another trading month has past and it was a successful one for our Deep OTM NP Strategy, albeit not as successful as in prior months.  This month we were presented with 500 trading oportunities.  Trading all 500 positions would have required $4,024,650 in capital.  Doing so would have generated $70,731.25 in premiums net of commissions.  However, volatility this month took its toll.  While the percentage of trades finishing OTM was high (473 of 500 for 94.6%) there were several of the 27 finishing ITM that had large losses.

Capital losses net of commissions totaled $25,909.85.  Thus, premiums net of capital losses came to $44,821.40.  This gives us a net ROIC of 1.11%, 11.61% annualized.  As I said, not great but still a solid profit.

This month I faired no better than the overall averages.  I selected 10 trades from the 500 presented that I thought had a high probability of finishing OTM.  9 finished OTM, with only AAWW finishing ITM.

Well, that’s it for this post.  I’ll be back later this weekend with a look at our NOV Week 4 selections.

Regards,

Troy

 

Weekly NP Strategy – OCT 7 Expiration

Fellow Traders,

There are 163 trades that meet our weekly selection criteria this week.  Unfortunately I am experiencing technical difficulties in getting the file loaded to the site.  I will try to get the file posted later today.

Also, I have been very busy the past few days so I have not had time to review the list sufficiently well to make any recommendations.  I hope to do that as the day progresses and if I find something I like I will post it here right away.

Hope everyone is having a great week.

Regards,

Troy

Weekly NP Strategy – SEP17 Exp Results

Fellow Traders,

Well our second week of selecting weekly NP trades has concluded.  Let’s take a look at how my choices faired.   You’ll recall my choices were:

(1) The $30 strike of Agilent (A) closed OTM yesterday at $36.36

(2) The $11 strike of Alcoa (AA) closed OTM yesterday at $11.97

(3) The $23 strike of Adobe (ADBE) closed OTM yesterday at $25.52

(4) The $30 strike of Sotheby’s (BID) closed OTM yesterday at $38.22

(5) The $77.50 strike of Catepillar (CAT) closed OTM yesterday at $85.90

(6) The $80 strike of Cummins Engines (CMI) closed OTM yesterday at $97.84

(7) The $22 strike of Encana (ECA) closed OTM yesterday at $23.85

(8) The $19 strike of Intel (INTC) closed OTM yesterday at $21.97

(9) The $25 strike of Microsoft (MSFT) closed OTM yesterday at $27.12

(10) The $40 strike of Pall (PLL) closed OTM yesterday at $44.03

(11) The $50 strike of Transocean (RIG) closed OTM yesterday at $59.17

(12) The $11 strike of Charles Schwab (SCHW) closed OTM yesterday at $12.34

(13) The $29 strike of Waste Management (WM) closed OTM yesterday at $32.01.

Hey, how about that!  13 for 13.  Two weeks running we haven’t had a single selection finish ITM.  We’re off to a awesome start testing the possibilities of this Weekly NP Strategy. However, two weeks does not make for statistically valid testing.

Regards,

Troy