Portfolio Update – GTY / HGT

Fellow Traders,

I want to update you on a couple of my open trades.  Both of these trades employ a different strategy than either my Deep OTM NP or regular NP/CC trades.  This strategy involves buying high yield stocks and selling CCs against the shares in addition to collecting the monthly or quarterly dividends.

First let’s look at Getty Realty Corp. (GTY).  Getty is a real estate investment trust which owns gas stations on the east coast which they lease to independent operators.  Getty first caught my attention back in March of this year when they had a significant drop in price.  I felt the situation causing the price drop would resolve itself and the stock would subsequently rebound.  I opened the trade by selling NPs.  Since that time I have collected two quarters of dividends and sold two rounds of CCs.  My complete transaction history is below.

In the 4 months I have been holding GTY I have collected $1,680 in premiums and dividends.   With $11,250 in capital at risk that’s a 14.93% return in only 4 months!  Annualized that’s approximately a 45% ROIC.  Not bad for a REIT, huh?  Note this return doesn’t include my substantial unrealized capital gains.

Next up is Hugoton Royalty Trust.  As many of my long-term readers know I have been trading HGT for about 15 months.  I’m on my third round of trading HGT.  In both of the 2 prior rounds my shares were called away when my CCs finished ITM.  Below is the transaction history for my third round of trading in HGT.

In 4 1/2 months in holding HGT I have collected $636.56 in premiums and dividends.  That’s a 5.92% ROIC.  This will only get better as I should receive one more dividend in August prior to the expiration of my covered calls.  My goal in this trade is to achieve a total return of 12-15% annually.

Regards,

Troy

 

JULY Expiration Results

Fellow Traders,

Not much to talk about with regard to my July results.  I only closed one position.  That was my NP trade in PBR.  This was my second consectutive month of selling NPs on PBR.  In both cases my puts expired OTM.   My transaction history for this trade is below.

I will be attempting to set-up a similar trade with PBR for the August expiration.  The AUG $31 puts closed Friday at $0.48 bid.  I’d like to get a little bit more than that if possible.  Thus, my intention is to wait and look to sell them on a down day in the coming week.

Regards,

Troy

 

Deep OTM NP Strategy – July 2011 Results

Fellow Traders,

Another trading month has come and gone.  Where does all the time go?  Each month seems to go by just a little bit faster than the last.  It was a good month for the Deep OTM NP Strategy.  We had a total of 43 selections meet our criteria this month, 40 finished OTM.  That gives us a success rate in excess of 93%!  Not bad considering the quality of the companies underlying our NP selections and the shakiness of the economy.  Below are a few metrics which provide further support for my conclusion that it was a good month for the Deep OTM NP Strategy.

Percentage NP Trades Finished OTM: 40 of 43 = 93.02%

Cash Secured Capital Required to Enter All 43 Trades: $274,300.00

Premiums Received (net of commissions): $5,361,40

Net Premium ROIC: 1.95%     Annualized: 26.42%

Our three losers for the month were PTIE, SIGA, and ZN.   A passive investor who failed to get out of these 3 prior to expiration would have suffered net capital losses (including commissions) of $1,851.85.  This would have reduced the overall net profit in trading this month to $3,509.55.  The net of losses ROIC would have been 1.28%.

I will be back with another post later this weekend with our new round of selections for the August – Week 4 period.

Regards,

Troy