The Money Tree

Safely Generating Income in Retirement

Archive for September, 2011

Weekly NP Strategy – SEP 17

Posted by mounddweller on September 8, 2011

Fellow Traders,

There were 1348 trade opportunities meeting our selection criteria for this last week before September expiration.  Clearly way too many for me to post online.  Below is a few select trading opportunities that caught my eye.   I selected them purely by looking at the chart and deciding whether I thought there was a good chance they would expire OTM.  Specifically, I looked for trades where the strike price was at or below recent lows.  I also tried to limit my selections to large-cap stocks.

Is this a good list?  Your guess is as good as mine.  We’ll just have to wait until next Friday to find out.  Best of luck to all.

Regards,

Troy

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Weekly NP Strategy – First Results

Posted by mounddweller on September 3, 2011

Fellow Traders,

Well our first week of selecting weekly NP trades has concluded.  Let’s take a look at how my choices faired.   You’ll recall my choices were:

(1) The $36 strike of BP Exploration (BP) which had closed the previous day at $38.19 closed OTM yesterday at $36.53

(2) The $26 strike of Research in Motion (RIMM) which had closed at $28.19 the previous day closed OTM yesterday at $30.12

(3) The $35 strike of Silver Wheaton (SLW) which had closed at $39.41 the previous day closed OTM yesterday at $40.71

(4) The $28 strike of Suncor Energy (SU) which had closed at $30.31 the previous day closed OTM yesterday at $30.41.

Hey, how about that!  4 for 4.  We’re off to a great start testing the possibilities of this Weekly NP Strategy.  Given the market’s performance Friday I suspect this next week may be a little more challenging.

Hope everyone is enjoying their Labor Day weekend.

Regards,

Troy

 

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Deep OTM NP Strategy – SEP Week 2

Posted by mounddweller on September 3, 2011

Fellow Traders,

After eliminating all of the stocks which have appeared on our lists previously this month we are left with a small and very uninteresting list of possible trades.

As you probably gathered from my opening statement I have nothing to recommend this week.  Given the sell-off on Friday and my expectation of more selling to come next week it is probably best that we keep our powder dry and wait for better opportunities to present themselves.

Regards,

Troy

 

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Two New NP Trades

Posted by mounddweller on September 1, 2011

Fellow Traders,

I want to update you on two trades I made earlier this week.  Yesterday, I took advantage of the US Justice Department’s decision to attempt to block AT&T proposed merger with T-Mobile.  AT&T (T) sold off hard on the news falling from $29.90 to as low as $28.00 (6.4%).  Believing the market had over-reacted I executed the following trade:

STO 5 T SEP $27 puts at $0.37

This gives me a 1.29% ROIC (net of commissions) with 17 days to expiration (DTE).  Annualized my ROIC is 27.68%

Today, I placed a trade in Annaly (NLY).  I’ve never traded NLY before.  My objective in this trade is very different from almost all of my other naked put trades.  In this case I want to have NLY put to me at $17.   You see NLY goes ex-dividend towards the end of this month (after SEP expiration).  If I have the stock put to me at $17 I will be eligible to receive the $0.65 quarterly dividend.   Here’s the trade I executed:

STO 5 NLY SEP $17 puts at $0.30

Excluding the potential for collecting a dividend this trade gives me a 1.64% ROIC (net of commissions) with 16 days to expiration (DTE).  Annualized my ROIC is 37.32%.

My return gets even better if NLY closes below $17 and I have the stock put to me.  In this case I will hold the stock at least until the ex-dividend date of 9/29.  Doing so will give me a cost basis of $16.05.  At that point I can either sell the stock immediately or sell OCT or NOV calls against my position.  My ROIC including the dividend is a juicy 5.6% with a minimum holding period of 29 days.

Well, that’s it for this evening.  Best of luck to everyone in this new month of September.  I have a feeling it is going to be a wild month.

Regards,

Troy

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What Others are Trading – SEP 2011

Posted by mounddweller on September 1, 2011

Fellow Traders,

Here is the monthly post to which you can post the results of your own trades.  What’s been working for you?  What hasn’t?  Enquiring minds want to know.

Regards,

Troy

 

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Weekly NP Strategy – SEP09 Exp.

Posted by mounddweller on September 1, 2011

Fellow Traders,

I’m back with a second week of selections from our Weekly NP Strategy.  Just a quick reminder and warning that this is a work in progress.  This strategy has not been tested in any way.

This week we only have 35 selections that meet our basic criteria (i.e., > 5% OTM, and ROIC > 0.5%).  Of those I only found two that I had even the slightest interest in.  The Goldman Sachs (GS) trade looks OK.  The stock hasn’t traded below the $105 strike price recently.  Several stocks from the list last week reappeared this week, albeit at higher strike prices.

You’ll note I have eliminated some of the columns of data that appeared last week.  I’m hopeful this will allow me to insert the image into the post in a font size that is actually readable.  Last week you needed a magnifying glass to read the chart.  Let me know if you feel any of the data columns I deleted are important and should be added back.

Well, that’s it for tonight.  I’ll be back tomorrow with a post about the results from our first week trades.

Regards,

Troy

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