The Money Tree

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Archive for May, 2014

April 2014 Results

Posted by mounddweller on May 4, 2014

Fellow Traders,

My reportable results for April are kind of sparse.  I only closed 3 positions, netting a whopping $337.95.  The total capital employed in these trades was $35,750 with an average holding period of 62 days.  Needless to say the ROIC was anemic and well below my desired annualized return of 15%.  I closed trades in KMI, NKE, and TGT.

During the month of April I opened several new trades, all but one of which were on stocks that I’ve traded before.  I sold naked puts on four stocks BEN, FDO, KMI, and LOW.  Details are provided below:

(1)  BEN – STO 2 MAY $50 Puts at $0.70

(2) FDO – STO 3 MAY $55 Puts at $0.80 (after BTC 2 APR $57.50 puts at a small profit)

(3) KMI – STO 3 MAY $32.50 Puts at $0.50 (after my APR $32.50 puts expired OTM)

(4) LOW – STO 2 MAY $46 Puts at $0.75 (new trade, have never traded LOW before, hence modest amount of capital placed at risk)

I also opened covered call trades on EXC, INTC, and KO.  Long time readers will recall my long-held position and saga in EXC.  Barring a collapse in the market it appears I may finally be able to exit my position in EXC not only with all my capital in hand but with a small profit as well.  I also sold covered calls against my long-term holdings in INTC and KO.  This was done with the expectation that the market is entering a period of near-term weakness and that INTC and KO will drift lower with the market.  To date that has not been the case, however, with INTC I have until August to be proven correct and in the case of KO I am prepared to roll out my MAY calls as needed to prevent the shares from being called away from me.  Here are the specifics of the covered call trades I placed in April:

(1) EXC – STO 3 MAY $36 Calls at $0.50

(2) EXC – STO 2 MAY $35 Calls at $1.00

(3) INTC – STO 1 AUG $26 Call at $1.45

(4) INTC – STO 2 JUL $27 Call at $0.80

(5) KO – STO 2 MAY $40 Calls at $0.82

With both INTC and KO I purposely did not sell calls against all of my shares.  Doing so allows me room to generate additional income and exit the trade profitably without risking the loss of my shares due to assignment.

Last, but not least, I executed a trade on the $VIX calls.  I am following a strategy I learned from my good friend and fellow online trader, Teddi Knight at http://www.fullyinformed.com/.

(1) $VIX – BTO 3 JUL $14 Calls at $2.70

I may expand the size of this position if the VIX continues to drift lower and gets to the lower Bollinger Band.  However, depending on the timing I may make future trades against the AUG calls.  The plan is to sell these calls when the $VIX jumps and then begins to fall back.

Well, that’s it for this month.  I have been very selective in my trading of late because I am finding it harder and harder to find trades with a good risk/reward profile.  I think we may have a bumpy summer period and that may open up a lot of trading opportunities.

Regards,

Troy

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