The Money Tree

Safely Generating Income in Retirement

What Others Are Trading – April 2011

Posted by mounddweller on April 15, 2011

Darn!  I messed up.  Here we are already half way through the month and I am just now posting my monthly message for y’all to tell me about what you’re trading.

Well, better late than never I suppose.  Anyone got any trades they want to brag about or lament on?

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5 Responses to “What Others Are Trading – April 2011”

  1. dealmakr said

    Hi Troy,

    A few updates on open working positions.

    ENOC short Sep 12.5 Puts

    Still watching this one and may add a few more

    CSCO

    This is one that I trade intraday and swing trade. Specific positions entered with using options, also has the weekly expiration cycle.

    Trading Position CSCO 04/14/11

    When CSCO looked to gap open on the the Flip announcement, went in and bot 1500 shares to get to CC status, but the enthusiasm waned. After looking at taking in another 2500 shares at 18, decided to take the loss as having purchased a total of 2500 shares and wrote the May calls, it looked to be a better entry point with the cost average @ 17.46. Market overall is still looking weak and will see what earnings have in store.

    The trades posted here are used specifically in an options trading position and are not reflective of what also may take place overall in swing & daytrading CSCO where the profits / losses won’t be applied here and the size of the position much larger and the timeframe much shorter, but every type of trade has its own parameters for risk/reward.

    12/31/10 Sold 25 Apr 18 Put .42*
    02/23/11 Sold 25 Jul 16 Put .45
    04/11/11 Sold 15 May 18 Call .50
    04/12/11 Bot 1500 CSCO 17.58 (26370)
    04/12/11 Sold 10 May 18 Call .45
    04/13/11 Bot 1000 CSCO 17.28 (17280)

    Closed trades Profit/Loss

    04/13/11 Bot close 25 Apr 18 Put .76 (850)

    Total return on closed trades (850)

    Short 25 May 18 Call 1200
    Short 25 Jul 16 Put 1125

    Net Position Exposure

    Long 2500 CSCO avg/share 17.46 (43650)

    Covered Calls 2500 shares
    Naked Puts 2500 shares

    Good Trading

    dealmakr

    Updated Position HBAN 04/16/11

    03/04/11 Bot 8000 HBAN 6.53 (52240)
    03/04/11 Sold 80 Apr 6 put .12*
    03/04/11 Sold 80 Apr 7 call .13*
    03/07/11 Bot 2500 HBAN 6.68 (16700)
    03/07/11 Sold 25 Jul 6 Put .33
    03/07/11 Sold 25 Jul 7 call .45
    03/09/11 Bot 5000 HBAN 6.77 (33850)
    03/14/11 Sold 50 Jul 8 call .16
    03/18/11 Sold 50 Oct 6 Put .48
    03/23/11 Sold 30 May 7 Call .17
    03/28/11 Bot 3000 HBAN 6.67 (20010)

    Closed trades Profit/Loss

    03/16/11 Dividend .01 on 15500 shares 155
    04/16/11 Expired 80 Apr 6 Put 960
    04/16/11 Expired 80 Apr 7 Call 1040

    Total return on closed trades 2155

    Long 18500 HBAN avg/share 6.64 (122800)

    Short 30 May 7 Call 510
    Short 25 Jul 6 Put 825
    Short 25 Jul 7 Call 1125
    Short 50 Jul 8 Call 800
    Short 50 Oct 6 Put 2400

    Net Position Exposure

    Naked puts 7500 shares
    covered calls 10500 shares

    BAC didn’t help the earnings outlook for many banks and with HBAN earnings on 04/20/11 estimated @ .12/share will wait and see how they look prior to opening more options positions. HBAN closed the week at 6.52, so a bit underwater overall. Would just love to see this stock trade between 6-7 bucks over the next year or so.

    Good Trading

    dealmakr

    Updated position XRX 04/16/11

    11/30/10 Sold 50 Dec 11 Put .16*
    11/30/10 Sold 30 Dec 11 Put .15*
    12/06/10 Bot 3000 XRX 11.74
    12/06/10 Sold 30 Apr 12 Call .82*
    12/31/10 Sold 25 Jul 9 Put .30*
    01/21/11 Sold 30 Feb 12 Call .12*
    01/27/11 Sold 30 Feb 11 Call .16*
    02/09/11 Sold open 30 Jul 12 Call .32*
    02/22/11 Bot 1500 XRX 11
    02/22/11 Sold 15 Apr 11 Call .46*
    02/23/11 Sold 25 Oct 9 Put .52
    03/14/11 Sold 15 Oct 12 Call .40
    03/16/11 Sold 15 Jul 11 Call .30
    03/16/11 Sold 25 Oct 12 Call .30
    03/22/11 Sold 15 May 11 Call .16
    03/25/11 Bot 1500 XRX 10.68 (16020)
    04/11/11 Sold 20 Oct 12 Call .47
    04/12/11 Sold 30 May 10 Put .14

    Closed Trades Profit/Loss

    12/18/10 Expired 80 Dec 11 Put 1250
    12/29/10 Dividend .0425 on 3000 shares 127.5
    01/21/11 Bot close 30 Apr 12 Call .28 1620
    02/13/11 Bot close 30 Feb 11 Call .13 90
    02/19/11 Expired 30 Feb 12 Call 360
    03/25/11 Bot close 15 Apr 11 Call .05 615
    03/25/11 Bot close 30 Jul 12 Call .14 540
    03/29/11 Dividend .0425 on 6000 shares 255
    04/11/11 Bot close 25 Jul 9 Put .13 425

    Total Return P/L on closed trades 5282.5

    Long 6000 XRX avg/share 11.29 (67740)

    Short 30 May 10 Put 420
    Short 15 May 11 Call 240
    Short 15 Jul 11 Call 450
    Short 25 Oct 9 Put 1300
    Short 60 Oct 12 Call 2290

    Net Position Exposure

    Covered Calls 6000 shares
    Naked Calls 3000 shares
    Naked Puts 5500 shares

    Opened up a few more naked Oct 12 calls and bot the Jul 9 puts back for a gain. Opened May 10 puts to shorten duration, don’t know if this was the best thing to do prior to earnings on 04/21, but figured if put @ 10 for another 3000 shares will lower cost basis on the position to 10.86 / share. Stock closed the week at 10.73, so still under water a bit overall. This position to me is a 2nd half 2011 play and am looking to see if they follow through on reducing the debt and buying back shares, along with keeping earnings in line with estimates.

    Good Trading

    Updated Position SVU 04/16/11

    03/23/11 Bot 4000 SVU 8.38 (33520)
    03/23/11 Sold 40 Apr 7 put .05*
    03/23/11 Sold 40 Jul 9 call .60
    03/29/11 Bot 2500 SVU 8.77 (21925)
    03/29/11 Sold 25 May 9 Call .55
    04/04/11 Bot 2500 SVU 8.99 (22475)*
    04/04/11 Sold 25 Apr 9 Call .35*

    Closed trades Profit/Loss

    04/16/11 Expired 40 Apr 7 Put 200
    04/16/11 Exercised 25 Apr 9 Call 875
    04/16/11 Sold 2500 SVU 9 25

    Total return P/L on closed trades 1100

    Long 6500 SVU avg/share 8.53 (55445)

    Short 25 May 9 Call 1375
    Short 40 Jul 9 Call 2400

    Net Position Exposure

    covered calls 6500 shares

    Earnings were well received by the market with the stock spiking over 10, dividend also declared. Will see how the stock trades at the new level before adding or reducing exposure.

    Good Trading

    dealmakr

    Here are some of the criteria and thoughts used when the initial SVU position was entered and I kept on adding to the position as the stock showed good strength.

    This is what I looked at when opening the SVU position as far as possible return on capital.

    Stock purchase (33520) on 4000 shares @ 8.38

    Option premium 200 on Apr 7 puts 2400 on Jul 9 calls 2600

    Dividend 352 May cycle

    Capital appreciation at 9 if called 2480

    Total return theoretically if called 5432 or 16.2% for a bit less than 4 months.

    If not called and the stock is still 8.38 would have taken in 2600 options premium and 352 dividend total 2952 for a return on capital of 8.80% not adding in any more trades.

    The Apr 7 puts were only opened IMHO as I believe that the stock will hold above 7 and the options expire (04/15) before earnings on 4/18. Usually don’t open cheap puts like those for an opening leg, but looked at it kind of like a bit of return on capital for low risk. Not looking to add any additional naked puts until earnings are out

    Now we all know that the market can chew any trading plan to shreds, but I thought the risk/reward numbers looked fairly good. Like any other position, this one can be changed and adjusted as events unfold and risk can be added or reduced depending upon whats going on. Would probably have taken a bigger opening position, but too much going on right now in the world.

    Good Trading

    dealmakr

  2. Rich said

    Late entry from 4 April:

    INTEL has been slowly selling off for the past 30 days or so. My APR 21 and 20 INTEL puts have moved into the money so I took the following action this afternoon:

    BTC 3 APR 21 PUTS @ 1.54 and rolled them out and down to 3 OCT 20 Puts @ 1.87 for a net credit

    BTC 1 APR 20 put @ .67 and rolled it out and down to 1 JUL 19 put @ .85 for a net credit

    INTEL closed today at $19.49. By rolling the puts out and down I can buy some time with the hope that INTEL will recover over the next few months. I would rather have not rolled the puts out so far but had no choice since I always try to roll out and down for a net credit.

    This is one of the advantages of selling cash secured puts instead of buying shares of stock. If the stock sells off you can do some damage control and roll your puts down, always trying to get a net credit. If at some point it becomes necessary to take assignment your net cost basis for the stock would be less due to the premiums collected over time.

    Rich

  3. Rich said

    Alcoa scorecard update:

    4/4 BTC 2 Apr 14 puts @ .01 to lock in a nice gain on the premiums ( this turned out to be a smart and lucky move since AA started trending down right after I bought these puts back )

    4/13 AA was trading at 16.73 so I BTC 1 Apr 17 put @ .33 and STO 2 May 17 puts @ .75 I bought back the put to keep from getting assigned and rolled out to the 2 May 17 puts to pick up a nice credit and also hoping that AA will move back up. Time will tell. But as noted in one of Teddi’s group posts or on her web site, my goal with this scorecard is to generate income and I intend to roll my puts forward, up, down or back as long as I can keep getting net credits on the trades.

    My YTD return on this scorecard is only 2.74% after this trade. Short of where I want to be at this point but moving in the right direction.

    Rich

  4. Rich said

    SunPower Co scorecard update:

    4/5 – STO 1 May 20 covered call @ .29

    4/15 – BTC 2 JUN 16 puts @ 1.31 and rolled them out and down to 2 SEP 15 puts @ 1.48 for a net credit.

    SunPower has been trending down for the last two weeks. Early last year I had 100 shares of SPWRA put to me because I thought I would pick up the stock and then sell covered calls until assigned. The stock never came back. Since then it has gone down to as low as 9.61 and as high as 19.88 ( 52 week range). So I continue to sell covered calls at the 20 strike as long as I can get a credit. On top of that I have been selling cash secured puts to bring my net cost basis on the stock down to 8.54 a share. Shares of SunPower broke below 16 on friday so, my point in rolling the Jun 16 puts out and down to Sep 15 puts was a move to ensure that I do not get caught asleep with the stock in free fall again. I’ll keep rolling the puts out and down until I can no longer get a credit, then take assignment and sell covered calls on those shares. The best outcome would be for the stock to reverse its trend and move back up. Will continue to play defense on this scorecard.

    Rich

  5. Rich said

    Rich’s Money Tree update:

    Due to the sell off in the market today I decided to make some adjustments on two of my scorecards.

    #1 – when AA shares dipped below 16 I bought to close 2 May 17 puts and rolled them out and down to 2 Oct 16 puts. I hate to go out so far but in this case had to so I could get a net credit on the roll.

    #2 – on this scorecard I had 9 May 16 puts open. I bought back 3 of the May 16 puts and then sold 2 Oct 15 puts. This gave me a net credit for the roll and also freed up $1800 in cash. I’ll watch my positions closely the rest of the week. If AA continues to sell off I’ll try and do the same roll to free up more cash.

    Over the past 60 trading days AA has found support at around 15.42 and resistance at 18.47

    If the stock should recover and head back up I can always buy back the Oct options and roll them up if I can get a net credit.

    Rich

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