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Archive for August, 2014

August 2014 Results

Posted by mounddweller on August 29, 2014

Fellow Traders,

Well another month has passed us by.  This one seemed to pass by very quickly.  Let’s see how I did.

I closed 5 positions this month, 4 were winners and one was a loser.  Let’s put the bad news behind us and talk about the loser first.  Back in April of this year I bought JUL $VIX puts.  My rationale was that the VIX was very low and that we’d have a pullback at some point before July expiration after all the big shots on Wall Street headed for the Hamptons in late May.  Alas, the substantial pullback I felt was a certainty never transpired.  Instead the averages just kept plowing on to new highs and the $VIX got even lower.

In early JUL as expiration drew ominously closer I decided to roll my puts out by selling the JUL puts and buying AUG puts.  The total amount of capital I had in the trade at this point was $1,578.  Thankfully for me we finally got a small, quick pullback in early AUG which allowed me to exit the position with a loss of just $530.  Am I happy about the loss, definitely not!  However, it is a much better result than losing the entire $1,578.  I could have rolled out again and tried to wait out being able to exit at a profit but given the market’s trend to the upside I decided to just cut my losses and move on.

This was the 3rd time I’ve tried to trade the $VIX.  I’ve lost money 2 of the 3 times.  I doubt I’ll try this trade again anytime soon.  OK, enough said about the lone loser.  Let’s now look at my winners.

My four winning trades were in INTC, MAT, QCOM, and TGT.

Last month I told you about being called out of my long-term position in INTC with deep ITM covered calls at $27.  The other part of that original trade included more covered calls at the AUG $26 strike.  I got called away at $26 and ended up making 9.88% on the trade.  I still have some INTC left in my account that I hadn’t sold covered calls against.  I will look to add to that position in the coming months once INTC falls back into my buy range which is just under $30.

Now, let’s look at MAT.  You’ll recall I originally sold the AUG $35 puts at $0.35 and my plan was to take assignment if they closed ITM and then turn around and sell SEP covered calls and try to collect the $0.38 dividend, the ex-date of which was 8/25.  Well, at AUG expiration MAT closed at $35.08, thus my AUG puts expired worthless.  On the following Monday with the dividend ex-date only one week away I took another look at my options.  As it turned out premiums were far better for the SEP puts than they were for the calls even after accounting for the $0.38 dividend.  Thus, I decided to sell the SEP $35 puts for $0.70.  After going ex-dividend on 8/25 MAT fell through support at $35 and got to as low as $34.46 on 8/26.  On 8/27 it bounced so I decided to buy back the SEP $35 puts at $0.55.  Doing so got me out of the trade with a profit of 1.24% in 41 days.  I’m now looking for a good time to re-enter the position as I feel MAT is a true bargain at these levels.  I’m currently tracking the SEP and OCT $34 puts.  MAT closed today at $34.46.

Next up is QCOM.  Last month I mentioned that QCOM was taking me for a wild ride.  Thankfully the ride, while exciting, ended profitably.  I entered this position back on July 24th by selling the AUG $74.50 puts.  A week later I had to role these down to the AUG29 $74 puts.  Then just one day later I had to roll down yet again, this time to the SEP $72.50 puts.  I also had to increase the number of contracts to keep the trade in a net credit status.  It bottomed at $72.49 on August 7th and has been rising nicely ever since.  On 8/26 I bought back my SEP $72.50 puts at $0.13.  I ended up closing the trade with a net gain of 0.79% (about $180).

My last ‘closed’ trade is in TGT.  I have closed in quotation marks it isn’t officially closed yet.  I’m actually waiting on the dividend I captured to hit my account on 9/10.  On 8/15 I bought TGT at $58.06 and sold the AUG22 $58 calls for $0.61.  I had the stock called away from me on 8/22.  However, I still earned the $0.52 dividend.  My net gain on the trade will be 1.68% with a 26 day holding period.

That’s it for my closed positions.  However, I also opened some new positions this month as well.  I currently have open positions in KMI, MCD, TROW, and VALE.  All but VALE are on my long-term hold list.  With KMI I already have a small position that I’m hoping to expand by having sold the SEP $37.50 puts at $0.63.  I initiated a small position in MCD by just buying the stock outright.  I couldn’t find a decent covered call trade I liked to try to capture the dividend so I just bought it straight out.  With TROW I’ve been selling the $80 puts for a couple months now.  It goes ex-dividend on 9/10 so I’ll need to make a decision on it in the next week or so.  Last up is my brand new trade that I just entered today in VALE.  On the Yahoo message board I frequent they’ve been talking about VALE for quite some time.  It’s not on my list of tracking stocks but after hearing about all of the successful trades everyone was making in it I decided to give it a try.  Today I sold 10 VALE SEP $12.50 puts at $0.15.  We’ll see how everything turns out in about 3 weeks.  My plan is if assigned at $12.50 is to sell covered calls and try to capture the large, semi-annual dividend of $0.4075 dividend in October.  If the puts stay OTM I may go ahead and do a separate buy/write trade later in the month to try to capture the dividend.

Well that’s it for another month.  Happy trading.

 

Best Regards,

Troy

 

 

 

 

 

 

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July 2014 Results

Posted by mounddweller on August 9, 2014

Fellow Traders,

I’m slow to post my monthly results again.  I think it is partly the result of my apathy towards this market.  As I mentioned last month I’m finding it harder and harder to identify trades which meet my level of comfort with regard to risk vs. reward.

However, that being said I did do a few trades during the month of July.  Let’s see what my closed trades looked like.

I closed 5 trades in July, netting $1,357.84.  The bulk of my profits came from a long-held position in INTC.  You may recall back in April I sold JUL and AUG calls on INTC at strike prices of $27 and $26 respectively.  At expiration in JUL my shares were called away at $27.  This resulted in a gain of $851, over $4 per share.   I chose not to roll my options out and up simply because it has been my experience that chasing a stock up doesn’t work.  I’d rather allow the position to be called away and then start again fresh when the stock inevitably takes another dip.

My other closed trades in July were in LOW, GIS, NUE, and XLNX.  With LOW and XLNX I bought back my puts early, locking in a profit before expiration.  GIS and NUE were held to expiration and expired OTM.  My average holding period for the four trades was 16 days.  GIS was the longest held at 25 days and XLNX the shortest at 6 days.

In July I also initiated 3 new trades and rolled out one existing trade.  My new trades were in MAT, TROW, and QCOM.  The existing trade I extended by rolling out was in the $VIX.  More about that in a few weeks when I report my AUG results.  So here’s what my 3 new trades look like:

(1) On 7/17 – STO 4 MAT AUG $35 puts at $0.35.  I got in a little early but I liked this trade because MAT is oversold, beaten down, and has been left for dead.  Had I waited a few more days I could have gotten $0.50 for my puts.  MAT has strong support at $35 and pays a quarterly dividend of $0.38/share.  If MAT slips below $35 at expiration my plan is to take assignment and sell the SEP calls while capturing the next dividend on 8/25.  While MAT is not on my long-term hold wish list, should I be assigned I wouldn’t mind owning it at the current price and holding it until it recovered.

(2) On 7/24 – STO 1 TROW AUG $80 put at $1.35.  Clearly I was early on this one as well.  The stock has continued to move south since I sold my put.  On Friday it closed at $78.11.  Unlike MAT, TROW is on my long-term hold list.  I want to build a ‘hold forever’ position in TROW, reinvesting the dividends until I’m ready to retire and then living on them in retirement.  For this reason, should TROW close ITM I will accept assignment and begin collecting the modest, but rapidly growing quarterly dividend of $0.44.  It has increased its dividend every year for the past 27.  In the past 5 years the dividend has grown 76%, from $0.25 to $0.44/qtr.

(3) On 7/24 – STO 2 QCOM AUG $74.50 puts at $0.60.  This trade has taken me on a wild ride.  The first week I felt like a genius.  However, on 7/31 my puts went ITM so I immediately rolled down and out two weeks to the AUG29 $74 puts for a net credit.  However, you’ll have to wait until SEP to hear how the wild ride ends because on 8/1 QCOM took another dip and I had to roll further out and down to the SEP $72.50 puts.  I’m no longer feeling like a genius and hope that I’m able to extract myself from the trade with all of my money if not my pride intact.

Well that’s it for another month.  If I get so motivated and find some time I may post again this month telling you a bit more about the stocks in my dividend superstar list and which ones I’m looking to accumulate long-term for my retirement.

Best of luck to my fellow traders.  Be safe out there!

Regards,

Troy

 

 

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