The Money Tree

Safely Generating Income in Retirement

Archive for August, 2009

Potential September Trades

Posted by mounddweller on August 23, 2009

I’m having a real hard time this month finding anything spectacular.  I can talk
myself out of most anything that looks remotely interesting.  Here’s what I’ve
considered thus far (in order of preference):

(1) FLIR – Stock closed Friday at $23.08.  BL is $23.95.  Stock is trading in
the middle of the V and hasn’t ran up a great gob from its 52-wk low of $18.81. 
Looking at doing an ITM buy/write on the SEP $22.5 calls with a net debit of
$21.90.  That would give me an ROIC of around 2.6%.  Not great, but given the
low volatility of late, I’ll take it.

(2) SYK – Stock closed Friday at $41.76, over the BL of $40.36.  Stock is well
off its 52-wk low of $30.82 but is still solidly in the V.  This is a first
class company.  However, for trading purposes I would like it alot more if it
were less than $40.  I’m considering opening a small position by buying at the
market and selling the ATM $42 calls for $1.00.  This would give me an ROIC of
2.97%.  Again, not great, but I’m not willing to trade the riskier stocks in
this market just for higher yield.

(3) BLUD – Stock closed Friday at $18.46 well above the BL of $16.88.  I would
like this one alot more if it had options available in $1 increments.  The SEP
$20 calls are too far OTM to have any premium and the ITM SEP $17.5 calls don’t
yield much either.  If I decide to do a trade in BLUD I suspect I’ll write the
ITM SEP $17.5 calls which at current prices would give me an ROIC of 2.11%.

(4) TK – Stock has run back up to $18.90.  I’m considering selling the SEP $17.5
NPs for $0.40.  That has an ROIC of 2.29%.  More than likely though I’ll hold
off doing this trade and see if I can get a better price on a down day. 
Ideally, I’d rather be selling the SEP $15 NPs.

(5) AA – Sell NPs on the SEP $11 puts for $0.22 or better.  Stock is well
extended above it’s 52-wk low but is still in the V.  However, it is above the
BL.  The PF for the SEP $11 puts is OK at 1.6.  Stock has negative net cash.   (Many thanks to Rich for posting his comments and for pointing out AA to me).

I also looked at re-selling NPs on IPI and O but didn’t like the risk/reward
ratios at any strike price. 

Regards,
Troy

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August Month-end Wrap Up

Posted by mounddweller on August 23, 2009

Well, what a month!  Almost everything in my CC/NP was called away, including my position in FRX which had been open for over 6 months.  Below is a quick recap of what transpired this month.

FRX – As I mentioned above, after 7 months of selling CC and NP on FRX I finally had the stock called away from me.  I originally entered this position in January at $25.60/share.  Over the months I had additional shares put to me at $22.50.  In addition, I sold CCs almost every month.  The end result was a total return of 18.51%, or 30.56% annualized.

GME – Sold ITM calls and OTM puts last month.  Despite the sell-off after they announced earnings I still ended up in the ‘sweet spot’  having my calls assigned and my puts expire worthless.  My one-month return was 5.37%, or 56.03% annnualized.

IPI, O, and TK – Sold NPs on these stocks.  All expired worthless.  My one-month returns were 2.1%, 2.31%, and 1.8% respectively.

My only remaining open position is my NP position in UNG.  For a description of what transpired with it see my post from earlier this evening.

I’ll be back shortly with another post regarding what new trades look intersting for the week ahead.

Regards,

Troy

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Rollout on UNG

Posted by mounddweller on August 23, 2009

I executed a rollout on my NP position in UNG on Friday.  You’ll recall I did the same thing last month.  However, last month I was able to get a net credit of $0.70 on my roll from the JUL $13 puts to the AUG $13 puts.  This month due to UNG being well under $12/share I was only able to roll for a $0.30 credit.  This gives me a ROIC of 2.31% (.3/13).  If all goes well natural gas prices will recover in the next month or so and I’ll either be able to exit the position or roll again for a much better net credit. 

The chart below summarizes all of my NP trades in UNG todate.  The net sum of these transactions is around $1,276 generated over a 3-month period, thus giving me a cumulative ROIC of almost 10%.

BLOG - UNG Position

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