The Money Tree

Safely Generating Income in Retirement

What Others are Trading – January 2011

Posted by mounddweller on January 1, 2011

Fellow Investors,

Here’s your chance.  Let us know what you’re trading.

Regards,

Troy

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13 Responses to “What Others are Trading – January 2011”

  1. Dave said

    A few months ago I bought FUQI at $7.40… (Its currently $6.32)

    I sold the near month 7.00 call and made 90c (Cost basis $6.50)… This call expired worthless…

    The next month I sold the 7.00 call again and made 45c. (Cost basis 6.05c)… This call expired wothless…

    This month I sold the 6.00 call and made 80c… (Cost basis 5.25c)

    Im yet to decide if I will let it be called away at 6.00… My options are the following…

    1) Roll out
    2) Let it be called away
    3) Sell call again (if it closes below 6.00 at expirstion)
    4) Sell stock (I would only do this if I thought the stock was going to drop allot for some reason)

    Conclusion: Even though the stock has dropped, through selling calls we have lowered our cost basis and turned a loser into a winner.

    • mounddweller said

      Dave,

      Glad this is working out for you. I have had other investing friends also successfully manage their trade, turning a losing stock, into a net gain. Conversely, I’ve had other trades that no matter how hard I tried I could not “make lemonade out of lemons”. My advice would be to continue to keep a close eye on it, set a stop-loss amount or percentage, and then get act on it if the trade starts to slip away from you.

      Thanks for posting your comments. Keep them coming.

      Regards,
      Troy

  2. Rich said

    INTEL Scorecard update:

    This morning I took the following action:

    bought to close 5 Jan 19 cash covered puts @ .07

    Sold to open 5 Jan 20 cash covered puts @ .59 for a net credit of $150.50

    My net cost basis as of this trade for 100 shares of INTC is now down to .90 per share. I should be able to get the net cost below zero on my next roll. ( need just over $46 in premiums to accomplish that)

    Rich

    • Dave said

      Hi Rich

      This sounds like an awesome strategy…

      I beleve I read about this strategy (or something simlar) in a book called ‘Generating Thousands’…

      Us this where you learnt about this or was it somewhere else…

      Please let us know.

      Thanks

      Dave

  3. Rich said

    Alcoa scorecard update:

    I took a little risk today to try to boost my ROC for this scorecard. My end of year return was just over 12%. I took the following action today:

    Bought to close my OTM Jan 14 cash covered put @ .06 and sold to open an ATM Jan 20 cash covered put @ .55 for a net credit

    I would have liked to roll to a FEB 14 or 15 put but the premiums were not very good. I did not want to go any farther out because I feel the market is a little overbought, including Alcoa so I sold the ATM Jan 16 put. This would give me about a 2.5% ROC for about 3 weeks if the stock closes above 16 at Jan expiry. If the put is in the money by expiry I will roll out and down to avoid assignment.

    I have the following PUT contracts on this scorecard. I do not own any shares of AA

    1 Jan 16
    1 FEB 14
    1 APR 11
    1 APR 14
    2 Jul 14
    2 Jan 2012 12.50

    Rich

    • mounddweller said

      Dave,

      I’ll echo Rich’s comments and recommend you check out my investing friend Teddi’s web-site, http://www.fullyinformed.com. Teddi has been investing for many years and is very good at it. I’m not surprised that you found similarities between her strategy and that found in the book “Generate Thousands”. Teddi and another investing buddy of mine both recommended that book to me a couple of years ago. It has several good ideas in it.

      Regards,
      Troy

  4. Rich said

    Correction to my Intel trade from yesterday:

    I goofed up somehow and my trade was not executed. After some research it seeams I entered an incorrect limit price and it was not filled. Not all was lost. I was able to roll the Jan 19 to a Feb 20 put. The Jan put premium had decayed a good bit due to the run up in the market yesterday.

    Today I also rolled my Jan 21 INTEL call out to a Jan 2012 22.50 call. With the aditional credit my net cost per share of my 100 INTC shares is now down to about .45. I should be able to get that below zero on my next trade, either later this month or next. With my net cost per share less than a dollar and with the $60 annual dividend my return on the shares will be approx 133% ( 60/45=133%) It will be even greater the following year because I will roll the LEAP call again and combine that with the dividends for a greater return.

    Note: Confusas said…” its better to plan a lot and accomplish half than to plan nothing and accomplish all”

    My plan this year is to close out my Intel options as they expire and use that capitol to bring the net cost of my Pfizer shares down to zero as I did with Intel. I have 100 shares of PFE from when I was collecting dividends from the Dogs of the DOW stocks. My goal is to accomplish this by the end of this year.

    Rich

  5. Dave said

    Anyone here ever checked out the website http://www.generatethousands.com/

    They have a results page that shows the last 7 years on all of there trades… Here is the link for the results page… http://www.generatethousands.com/archieves.php

    Any thoughts anyone??

    Dave

    • mounddweller said

      Dave,

      Yes I have checked out the web-site and read the book. While I don’t necesarily agree with everything the author says, it is a good read and you can gleen some usefule information from it.

      Regards,
      Troy

  6. Rich said

    Shares of Alcoa have been fluctuating above and below $16 for a little over a week. I had a Jan 16 cash covered put that was fluctuating right along going in and out of the money. Jan options expire tomorrow. My goal for this scorecard is not to own any shares of AA at this time, but just to recieve a steady flow of cash into my account. Today I took the following action:

    bought to close my Jan 16 put and sold to open a Feb 16 put for a net credit. If Alcoa should begin to pull back more I will roll my put out and down to a 15 strike, picking a month where I can do so and still get a credit.

    Rich

  7. Rich said

    This morning I bought to close my FEB 18 put @ .02 and sold to open a Mar 20 put @ .28 for a net credit. This action allowed me to retain about 95% of the original premium received from the Feb 18 put.

    As of this trade my net cost per share for 100 shares of INTEL ( purchased last January for a cost basis of $20.83 a share ) is now 27 cents per share.

    Question: when my net cost per share is down to zero, will I be correct in saying the dividend yield of my INTEL shares is 100%?

    Rich

  8. Rich said

    Alcoa scorecard update

    This morning I took the following action:

    bought to close my FEB 14 put @ .05 and sold to open a APR 14 put @ .26 for a small net credit. This transaction allowed me to lock in about 89% of the original Feb 14 premium.

    My 13 month return on this scorecard is 12.8%, just under 1% per month. I have the following contracts in play:

    1 FEB 16 put
    1 Apr 11 put
    2 APR 14 puts
    2 JUL 14 puts
    2 Jan 12.50 puts

    I do not currently own any shares of Alcoa. Over the next several months I plan to consoldate my contracts in the same month at either the 14 or 15 strike, depending on how AA is trending. In case of a pullback or correction it will be easier to roll my contracts forward and down when you have multiple contracts in play. Example: If I had for instance 5 Apr 14 contracts and AA began to sell off I will have a better chance of rolling my contracts forward and down for lets say 4 Jul 13 contracts ( still obtain a small credit ) and free up $1400 in cash.

    Rich

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