The Money Tree

Safely Generating Income in Retirement

CSCO – An Update

Posted by mounddweller on July 30, 2011

Fellow Traders,

Earlier this week I executed a couple of trades on my open CSCO position.  Those of you who regularly follow my trades will recall my open position in CSCO previously consisted of two parts, (1) I was long 500 shares of CSCO at $18, having had the stock put to me several weeks ago, and (2) I was short the SEP CSCO $16 puts after having rolled them out a prior JUL expiration.

On this past Thursday, early in the day when the market was still bouncing back from the beating it had taken the day before I was able to execute the following trades.

First, with regard to the 500 shares I am long CSCO I was able to STO the NOV $18 calls for $0.45.  My current cost basis in the stock is $16.86 so if the calls finish ITM in NOV and I choose to not roll them out I will leave this trade with a profit, albeit one below my minimum target return of 12-15% per year.  My ROIC will be 8.39%.  The reason I chose to execute this trade despite the potential for a lackluster ROIC is that I didn’t want to continue to hold the stock without getting some cash flow from it.

My second trade involved a BTC of my 5 SEP $16 puts.  I was able to close out this position with a negligible profit.  I did so because I felt there might be better opportunities going forward to position myself at the $15 strike.

Some of you may have noticed that I haven’t done a very good job of keeping my ‘Open Positions’ and ‘Historical Results’ updated.  I will use these recent CSCO trades as an opportunity to get that information updated.

Regards,

Troy

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