Fellow Traders,
There isn’t much to report for the month of September. The level of activity at work has severely curtailed my trading. This is both a good and a bad thing. Good in that it has allowed me to miss several ‘opportunities’ which likely would have resulted in a bad trade and would have put me in a rescue mode. Bad in that I did make a few snap decisions which I’m now regretting. Let’s first look at the trades I closed in September.
I closed 3 trades in September. They were in KMI, TGT, and TROW. KMI is a stock in which I’m looking to build a long-term position. I have been trading naked puts in KMI since February. The range of puts I have sold has been $32.50 – $37.50. In September I had 2 SEP $37.50 puts expire OTM. This trade netted me $118.05 with a ROIC of 1.57%. I kept the trade very small because I felt KMI might fall further and I wanted to be able to roll out and down while increasing the number of contacts as necessary. That didn’t happen so I’m happy with a small profit.
Next up is TGT. My TGT trade started back in early August as a buy/write in order to capture the dividend. I bought the stock at $58.06 and sold the AUG $58 calls. The calls were exercised and I had the stock called away from me at expiration and after the ex-date. The dividend landed in my account on September 10. This trade was also small, only a couple hundred shares. I netted $195.10 and my ROIC was 1.68%.
My last closed trade was in TROW. TROW is another stock in which I’d like to build a long-term position. Back in July I began this effort by selling the AUG $80 put. TROW fell significantly in AUG and rather than accept assignment I decided to roll the AUG puts out into SEP. TROW subsequently recovered and the SEP $80 puts expired OTM. This trade netted me $216.60 and my ROIC was 2.71%. I am now waiting to reenter the trade with NOV expirations being the target.
Now let’s take a look at the new trades I opened in September. Actually one, VALE is a trade I opened in late August. You’ll recall I sold the SEP $12.50 puts for $0.15 and said I’d let the stock be put to me if they expired ITM. The purpose of doing so was to be long the shares and in a position to capture the substantial $0.40 semi-annual dividend whose ex-date is October 17. The trade started out as planned but has fallen much further than I anticipated. I am now sitting on a substantial unrealized loss as I bought the stock at $12.50 and it closed today at $11.31. This, however, is an improvement over its low last week of $10.61. My plan remains to sell $12.50 calls after it recovers and I’ve earned the dividend. Now it just looks like it’ll take a bit longer than I originally anticipated.
My new open trade is in ADI. Specifically, I sold the OCT $49 puts at $0.75. This is one of those cases where I took my eye off the ball and let the trade run away from me. My original intent was to sell the puts as the result of the stock hitting and bouncing off the lower Bollinger Band. The trade was to end when the rebound petered out and I had captured a large portion of the initial premium. Unfortunately as I mentioned at the beginning of the post I’ve been very busy at work and I missed the turn in the stock. ADI got as high $50.64 after bouncing off the lower Bollinger Band at around $48.72. Today, ADI closed at $47.15. Unless we have a big bounce in ADI before expiration, I’ll need to roll this position out and down. I’ll likely increase the number of puts in the trade and roll down to the $48 strike.
So there you have it. That’s the extent of my trading during September. Best of luck to everyone as we head into the historically volatile month of October.
Regards,
Troy
The Money Tree 