The Money Tree

Safely Generating Income in Retirement

Archive for April, 2012

New Trade – SLW

Posted by mounddweller on April 27, 2012

Fellow Traders,

Believe it or not I placed another new trade today.  Hard to believe isn’t it.  My trading had slowed way down.  Primarily for two reasons, (1) I didn’t trust the market, and (2) everything I wanted to trade had run up in price beyond what I was willing to own it at.

So, what changed?  Well, to be honest, nothing really.  I still don’t trust this market and there just isn’t much that I like at these prices.  However, I finally said I have to do something, I can’t keep all of my money in cash, not if I want to reach my retirement goals.  So, I decided to give Ron Groenke’s new trading system a try.  As I mentioned in my post yesterday, Ron has had great success with his new “Show the Trade” algorithms.  Having used Ron’s VISIONS software for the past several years, and having met him personally, I trust that he knows what he is doing.

So, I’m ‘sticking my big toe in the water’ so to speak and seeing if I can replicate Ron’s results in my own trading.  Yesterday, was my first “Show the Trade” trade in Chevron (CVX).  Today, it was Silver Wheaton (SLW) that flashed a buy signal so since I’d successfully traded it before and was comfortable owning it at these prices I decided to give it a go.

Here are the trades I executed.

(1) Bought 200 shares SLW at $30.07

(2) STO 2 MAY $29 puts at $0.64

Here is the one year price chart for SLW.  As you can see it has strong support in the $28-$29 range.

Well, there you are, two trades in two days.  I must be losing my mind (ha ha).  Time will tell if I can replicate Ron’s success.  Have a great weekend.

Regards,

Troy

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New Trade – Dividend Superstar – Chevron

Posted by mounddweller on April 26, 2012

Fellow Traders,

I executed a two-part trade in my dividend superstar stock Chevron (CVX) today.  Here are the two trades I executed:

(1) Bought 100 shares CVX at $105.59

(2) STO 1 MAY $105.00 put at $2.02.

Some of you may have immediately noticed that I bought CVX without an accompanying short call position, but that I did sell a put.  Why did I do this?  Well let me tell you.  It’s because this is my first trade using Ron Groenke’s new “Show the Trade” functionality in his VISIONS software.  Ron has developed a mathematical algorithm designed to alert you to when the best possible time is to buy a stock for a quick gain.

Ron’s results in trading these short term buy/sell signals has been outstanding to say the least.  So much so that I decided I needed to try it myself.  I decided my first trial needed to be on a fairly conservative, blue-chip kind of stock.  What better choice than one of my dividend superstars, and more specifically a mega-cap, multi-national company like Chevron.

Below you can find a 1-yr chart of Chevron from Ron’s VISIONS software which shows the buy/sell recommendations from the past year.

Following the previous buy/sell signals for CVX from Ron’s “Show the Trade” algorithm over the past 12 months would have resulted in a gain of 28.44% in 3 trades.  It’s important to note that Ron’s program is not designed to predict every turn up or down in the stock.  It gets you into the trade when it appears the stock is ready to run up but then gets you out after a predetermined gain so you don’t stay in it too long and then end up giving back your gains.  It also gets you out at a predetermined loss if the trade is not going as planned or predicted by the algorithm.

The software generated the buy signal yesterday after the market close.  CVX had closed at $103.85.  The stock opened this morning at $104.00 and never looked back.  By the time I could place my trade during lunch it was over $105.00.  It closed today at $106.22.   The put I sold at $2.02 closed the day at $1.63.

Regards,

Troy

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Weekly NP Strategy – 050412 Expiration

Posted by mounddweller on April 26, 2012

Fellow Traders,

I’ve got 2 out of 81 possible trades for your consideration this week.  They are ANF and APC.  I’ve suggested ANF previously with mixed results.  I believe once it finished ITM but was an easy work out by selling the next month’s ATM covered call.  This week the $48 put looks good with 5.68% DSP and 0.79% ROIC.

I also like the looks of APC.  However, caution is advised with it because it announces 1st quarter earnings next week.  The $70 put has 6.11% DSP and 0.56% ROIC.

The other 79 trades meeting our screen criteria can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

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Update – EXC

Posted by mounddweller on April 22, 2012

Fellow Traders,

I wanted to give you an update on my position in EXC.   My last update was about 4 months ago.  You can read it here: https://troysmoneytree.wordpress.com/2012/01/03/new-trade-exc/.  I initiated a long-term position in EXC back in April of 2010.  My objective in this position is to over time accumulate enough shares such that the quarterly dividends will provide a portion of the income I need in retirement.

Since I initiated the position I have periodically sold covered calls and naked puts to generate income off the position and to accumulate additional shares when EXC falls to a favorable price.  Initially I was taking the dividends in cash but recently I’ve began to reinvest them in additional shares.  This should allow me to acquire a substantial number of additional shares over the next 10 years.  Currently, I own 507 shares.

Last month I sold 3 APR $38 puts for $0.45.  EXC for the first time in quite a while fell below $38.  Thus, I chose to roll my puts out into MAY.  I did this by buying to close (BTC) the APR puts for $0.30 and selling to open (STO) the MAY puts for $0.85.  This resulted in a net credit of $153.43 further reducing my average cost in EXC to $35.65.

To date I have had my position in EXC for just over two years.   During that time my total cash returns have been $2,691.28 (net of commisions). This gives me a ROIC of 28.31%.  Annualized this comes out to 14.06%.

I hope to be able to replicate this strategy with other blue-chip, high dividend companies once they come into my buying range.  Other companies I’d like to implement this strategy with include AT&T (T), Intel (INTC), and Wal-Mart (WMT).

Regards,

Troy

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Update – VXX

Posted by mounddweller on April 20, 2012

Fellow Traders,

Mr. Market is still refusing to cooperate with regard to my VXX trade.  As you’ll recall back on 2/29 I sold 5 MAR $22 puts for $0.50.  VXX at the time was at around $24.75.  Since then the VIX and VXX have continued to fall.  Consequently, I have been rolling out my puts, each time for a net credit.

Today, I bought to close my 5 APR $22 puts for $4.40 and sold 5 MAY $22 puts for $4.95, a net credit of $0.55.

So today here’s where I stand in this trade.  My plan is to continue to roll this out until VXX recovers back to $22.  Thus far I have a total net credit (after commissions) of $1,007.12.  That’s a 9.56% ROIC.

Regards,

Troy

 

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Weekly NP Strategy – 04/27/2012 Expiration

Posted by mounddweller on April 19, 2012

Fellow Traders,

You can find the results of my Weekly NP Strategy screen here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

This week there are 90 trades from which to choose.  I found 3 that I thought were interesting, APPL, AMZN, and WLT.  I tried something different this week.  As part of my due diligence I ran the trades through Ron Groenke’s “Show the Trade” screen.  For those unfamiliar with Ron’s VISIONS software it uses proprietary models and algorithms to identify winning trades.   I found AMZN and WLT this way.  APPL I like simply because I don’t think it will fall to $550 before next Friday (4/27).

Also, wanted to apologize for not posting much of late.  I’ve been very busy and it has been hard to keep up with the markets.

Regards,

Troy

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Weekly NP Strategy – 4/21 Expiration

Posted by mounddweller on April 12, 2012

Fellow Traders,

I’ve posted a spreadsheet out in the files section of the Yahoo group board with the selections for our Weekly NP Strategy.  You can find it here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

The increased volatility and upcoming earnings season seems to have impacted the number of possible trades meeting our selection criteria.  This week there are well over 300 to choose from.  I’ve highlighted 3 or 4 trades that look interesting to me.

Regards,

Troy

 

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Weekly NP Strategy – 04/13 Expiration

Posted by mounddweller on April 5, 2012

Fellow Traders,

My apologies for being out of touch for the past couple of weeks.  I’ve been very busy at work.  I did finally have time this evening to run the Weekly NP Strategy scan.  This week the scan returned 37 trade opportunities.  While I must admit I didn’t have time to do much in the way of due-diligence, one did catch my eye.

Once again it was a trade in VXX.  This time I like the $16 strike.  VXX has been rising for the past several days after bottoming a couple weeks ago at $15.57.  This $16 strike closed today at $0.13 bid.

This trade is not without significant risk.  Proceed with open eyes.

The other 36 trades can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

 

 

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