The Money Tree

Safely Generating Income in Retirement

Update – EXC

Posted by mounddweller on June 10, 2012

Fellow Traders,

I want to update you on my long held position in EXC.  My frequent readers will recall that I’ve been rolling 3 puts at the $38 strike price since late February.  On Thursday of this past week I closed out that portion of my position in EXC.

EXC has been bouncing around quite a bit of late.  Since January it has been as high as $42 and as low as $36.70.  Since bottoming out around the first of June it had bounced back up to around $39.  Despite only having a week to expiration I decided on Thursday to take advantage of the big up-day and buy back my 3 short puts.  I was able to do so at $0.15.  I originally sold these puts back on May 18th for $0.75.  Thus, I made about 1.5% ROIC in 3 weeks time.

As I mentioned earlier I had been rolling these puts since my original sale back in February.  If we look at this entire series of put sales I made $392.34 net of all commissions on $11,400 in capital over about a 11 week time period.  By my rough calculations that’s just over 1% a month return on my invested capital.

One other thing I wanted to point out was the interesting price action on EXC on Thursday and Friday of last week.  As I mentioned earlier EXC had been rising since the first of the month.  On Thursday the stock gained an amazing 3.98%.  This is a BIG one-day jump for a boring utility.  I decided rather than wait another week to see if the put would expire worthless I would instead buy to close my open puts.  Wow, am I ever glad that I did because the next day EXC gave all those gains back and then some.  It closed Friday at $37.41.

I now am now long 500+ shares.  I intend to continue to monitor EXC closely and possibly begin selling another round of puts at the $37 strike price.

Regards,

Troy

 

 

 

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