The Money Tree

Safely Generating Income in Retirement

What Others are Trading – August 2009

Posted by mounddweller on July 31, 2009

Back by request after a several month hiatus, I’m reinstating my “What Others are Trading” posts.  If you’ve just lurked in the past I’m anxious to hear from you.  Let me know what’s working for you, what’s not, and what looks interesting going forward.  Come on now, don’t be bashful.  Let’s get some discussion going.

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13 Responses to “What Others are Trading – August 2009”

  1. Rich said

    I had a Sep 10 call on PWE assigned early last week. Was surprised to see it assigned so early but as they say, assignment can come at any time. Anyway, I made about a 21% return in a little over 4 months when you factor in the dividends received over the four months.

    I did a buy write on PWE today. bought 100 shares at 13.33 and sold a Mar 15 call for .60. after commissons this will have a 3.88% gain if it expires and a 15% gain if assigned in March. ( I will also get about $98 in dividends over that time. Including dividends, if assigned, it would be about a 22% return for 7 months).

  2. mounddweller said

    Rich,

    How often and how long have you been trading PWE? It is a CANROY, correct? Are you trading it in an IRA or a cash account? Have you had any issues with taxes?

    Thanks…
    Troy

  3. Rich said

    I’ve been trading PWE since back in 2007. I currently have 900 shares between three accounts. I don’t actually trade them, use it for long term income. Only buy more when I build up cash or an option gets assigned. I always sell OTM calls so if assigned I get the stock growth, the option premium and the monthly dividends. It use to be called Canetic Energy trust (CNE) and changed to Penn West Energy (PWE) toward the end of 2007. It is a CANROY. I trade it in both our IRAs and in a taxable option account. When I do my taxes there is a place to record foreign taxes. Have not had any issues. Scottrade deducts the tax and its reported to me on my annual statement from them.

  4. Rich said

    I did another roll forward on GE today. As I noted in an earlier post, I’m currently upside down on GE so each month I’ve been methodically rolling contracts forward, gaining a little premium each month.

    BTC 1 Aug 12 @ 2.76
    STO 1 Dec 12 @ 3.15

    overall gain was $27.49. I’ll also get the next dividend of $10 in Oct unless I’m called out early

  5. Rich said

    Another Roll forward today – I BTC 2 Aug 4 URE contracts and STO 2 DEC 4 URE contracts for a net gain of $33.25. My URE scorecard now shows a 19.8% gain in less than seven months for this 2X ETF. Using Ron’s guidance from the book “Show Me the Money” I’m striving to hit singles and doubles instead of going for the home runs that got me in trouble before I read his book. This ETF has had some good overall growth since January.

  6. mounddweller said

    Rich,

    Good job. You’ve hit upon the very thing that I like most about Ron’s approach, i.e. hitting singles and doubles every month. I’ve been pulling 2-4% out of the market every month since I started using VISIONS. Swinging for the fences and trying to get 8-10% every month (as I used to do) is fraught with risk. For every two or three trades that go well you’ll have one that goes bad in a big way. The ol’ ‘two steps forward, one step back’.

    Regards,
    Troy

  7. Rich said

    Alcoa (AA) assignment – had my Aug 11 call assigned on friday. This buy write trade gained me another 4.1% on this DOW 30 stock. Since early December I have gotten almost a 113% return on three separate buy writes on Alcoa. When my cash settles I’ll take a look at trying to repeat with a Sep 13 call.

    Rich

  8. Rich said

    I did a roll down today on one of my URE positions. I BTC a Sep 4 call and STO a Sep 3 call for a net gain of $68.50. My average cost per share on six positions in URE is 3.86 and after this transaction my net cost per share is now 2.98 and my overall gain to date on this scorecard is now 22.75% for 7 months or about 3.25% per month. Why did I do a roll down? well, I’ve gotten a very good return for now and the market has run up quite a bit since March. so if the market takes a pause, dips or just keeps its current trend I think I’m in good shape. If I get assigned early I’ll have some cash to look for another opportunity before Sep expiration.

  9. Rich said

    Update on my GE scorecard. As noted in a previous post I am still upside down on this scorecard. However, little by little I have been rolling calls and gaining back some. Today I BTC a Sep 13 call and STO a Dec 12 call for a net gain of $105.49. I currently have a $4500 dollar drawdown in GE, but with what I have done the past few months and if all my calls were assigned today I would end up with a little less than a $300 overall loss. So, if GE continues up or stays range bound for awhile and I can do a few more roll forwards I should be able to come close to break even. Again, hitting consistent singles is the key to success.

  10. mounddweller said

    Rich,

    That’s awesome! I wish I had been more diligent in managing my position in GE. I’m still way, way in the red on it.

    Troy

  11. Rich said

    New position in Alcoa ( AA ) I bought 100 AA @ 12.29 and STO one Oct 12.50 contract .99. Net gain if it expires is 6.77% and 7.14 if assigned at Oct expiration. Pretty good returns for less than two months.

    Note: I caught a segment of Mad Money last night and Cramer told a caller not to buy Alcoa. Well, it may not be a good growth stock right now but its a fantastic stock for covered calls! I even picked up $3 in dividends yesterday on my last position for some pocket change.

  12. Rich said

    Roll forward for PWE….. Today I BTC one Sep 12.50 contract and STO one Mar 12.50 contract. My purpose here is to prolong assignment and collect as much monthly dividends as possible (it pays about $11 a month after foreign tax ) and reduce my net cost per share. I had a PWE call assigned early just recently and figured since this stock is now ITM I might as well get as much as I can out of it. My average cost per share is 11.92 and with todays additional net premium of $43.49 my net cost per share is down to $10.95. Trying to consistantly hit singles.

  13. Rich said

    Freddie Mac = this was one of my disaster purchases prior to reading Ron’s book, Show Me the Money. I bought FRE at 3.57 last August and sold a Sep 5 call for a 11% gain. Then as we all know, the housing market really plunged and along with it FRE. Since it was only a small percentage of my portfolio I have hung on to the stock. Well to make a long story short, FRE has recently come alive again and is moving up. So when its options started to move up I sold a SEP 2 call for a small premium. The call is now in the money so I BTC the Sep call and sold an Apr 3 call for a roll up and a very small premium. Hate to go that far out but if it continues to move up I’m in a lot better position to break even, or at the least, to lessen my loss.

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