The Money Tree

Safely Generating Income in Retirement

What Others are Trading – September 2010

Posted by mounddweller on September 5, 2010

All,

Please post your comments are what you are finding attractive in this market and any new trades you have made.

Regards,

Troy

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10 Responses to “What Others are Trading – September 2010”

  1. Rich said

    Been traveling for over two weeks. finally got back home yesterday. should have stayed camping, as soon as we got home the market turns down. Hopefully its just a pause.

    I had a Sep 20 MO call assigned last week. I’m going to hold onto that cash for awhile and see if the market can stay here or not.

    My Alcoa scorecard is in a defensive mode now. I kept selling puts as the stock fell and now I find myself with several contracts in the money. I should have beeb either taking assignment or rolling out and down when I could. Teddi shared that with me several weeks ago. So today I bought back my Oct 12 put and sold an Apr 11 put. Thats the only contract at the moment I can roll out and down. The rest I will have to just roll forward at the same strike. I have several weeks left before Oct expire so will keep monitoring for good opportunities to roll.
    I still have a 6.14% ROC for 9 months. Not great but it beats a money market account.

    Rich

  2. Rich said

    My Jan 20 covered call on Altria ( MO ) was assigned will I was on vacation. The ex div date for MO was 9/13 so someone exercised their call option on MO on 9/10/10 so they could take ownership of the stock and qualify for the Oct dividend. This action closes out my MO scorecard. I achieved a 9.53% return on this card for about 9 months at risk.

    • mounddweller said

      Rich,

      Almost 10% in 9 months is a great return with a large-cap stock like MO. Congrats! How are you going to reinvest the proceeds? Do you have another trade picked out?

      Regards, Troy

      • Rich said

        I want to obligate more capitol to Kraft. I currently have 2 Oct 28 puts in play. Will be looking at Nov strikes and if we get a pullback I will take a look at strikes around 27. I have 4 INTEL Oct 17 puts open and I’m hoping that they will expire OTM and will use that capitol also to build up my KFT puts. KFT is an interesting stock. I guess its a good defensive stock, during the last pull back, INTEL followed the market down but KFT held pretty steady and even moved up some. So I want to pare back on INTC and add to KFT over the next few months.

        Rich

  3. Rich said

    Back in January I sold a FEB 20 cash secured put on SPWRA. The stock was assigned to me in Feb @ $20 as the stock begain to trend down. I then was able to sell three consecutive covered calls which expired out of the money each month. Thats the bad news. The good news is that since April I have been selling puts and have been accumulating cash from the premiums on the puts plus the premiums on the covered calls. My cost basis which includes the cash secured to cover 4 put contracts is $6734. I have received $701.90 in premiums which have reduced my share price cost basis down to $15.08. My return on capitol is currently 10.42% for 9 months. Sunpower does not pay a dividend which is a bummer. Also I would have to go all the way out to Jan 2012 to get a covered call at a 20 strike. So the game plan is to continue selling puts to reduce my net cost per share and hopefully the stock will begin to trend back up so I can once again sell covered calls against my shares.

    • mounddweller said

      Rich,

      Another great result. It is a good example of turning lemons into lemonade. It also shows how perseverence and actively working a position each month can turn a position around.

      Regards, Troy

  4. Rich said

    today I rolled my Oct 14 AA put out to a Jan 14 put for a small net credit. I now have an 8.6% 9 month return on my capitol. More importantly, I currently have 8 put contracts in play and by the end of Dec I will have received enough option premiums to sell an additional put contract. What this means is that if I can replicate this years gains by the end of next year (or sooner ) I may be able to accumulate enough additional premium income to add another option leg to my scorecard. ( a total of 10 contacts ) By repeating this strategy over and over I can benefit from the magic of compounding.

    My thanks to Teddi for explaining this strategy to me.

  5. Rich said

    This morning I rolled my Oct 23 put out to an Apr 23 put for a net credit of $51.50

    I bought to close the Oct 23 put for $389.25 and sold to open the Apr 23 put @ $440.75

    I don’t expect INTEL to move above 23 by Oct expire. One of the pros about selling puts is that you have more control over when you want to be assigned. (rolling forward and/or rolling forward and down when necessary )

    I also have an Oct 24 put which I will take action on next week. In addition I have 4 Oct 17 puts which should expire out of the money at expire.

    Rich

    • mounddweller said

      Rich,

      I, too am trading INTC puts. I’ve been rolling 5 $19 puts for a couple of months now. If the market stays positive it looks like they expire OTM this month. If not, I’ll roll them again. Like you I continue to learn the power of selling puts from our friend Teddi.

      Regards, Troy

  6. Rich said

    This morning with the DOW currently up about 159 I decided to buy back 3 Oct 13 puts and rolled them forward to 3 Nov 13 puts for a net credit of $45.50

    bought back the Oct 13 puts for $288.75 and sold the Nov 13 puts for $334.25

    My 10 month ROC for this scorecard is now 9.01%

    I currently have 8 cash secured puts in play. I do not own any shares of Alcoa at this time.

    Rich

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