The Money Tree

Safely Generating Income in Retirement

Archive for November, 2014

October / November Results

Posted by mounddweller on November 30, 2014

Fellow Traders,

Ok, I know I didn’t provide an update last month.  Quite honestly I had very little to write about.  My trading in October was negligible.  I closed two trades one winner and another a loser.

My losing trade was in Analog Devices (ADI).  On September 17th I sold to open OCT $49 puts for $0.75.  At the time ADI was trading at $49.71.  I sold the puts as the stock bounced off the lower Bollinger Band.  My intent was to buy back the puts once the stock ran into resistance or hit the upper Bollinger Band.  As you can see, after about three days the stock began to trade sideways.  Had a stuck to my plan and exited I would have closed out the trade with a small gain.  Instead I chose to hang on and hope that ADI would resume its climb to the upper Bollinger Band.  Failure to follow my plan cost me dearly.  I held on until OCT expiration but not wanting to have ADI put to me and not wanting to roll out to NOV I chose to buy to close my puts and accept the lost.  As you can see I bought back my puts at almost the worst possible time.  Shortly after expiration the stock began to rise.  Had I simply rolled out at the $49 strike or down and out to a lower strike I could have managed the trade back to a profitable close.  Alas, hindsight is 20/20.

BLOG - ADI

My revised plan is to resell another round of puts once ADI returns to a favorable trading position.  Thus far that has not occurred and I am sitting on my loss.

My winning trade in October was in T. R. Price (TROW).  TROW is on my list of stocks that I’d like to accumulate for my retirement portfolio.  On October 15th I sold to open the NOV $70 puts at $1.85.  Like with ADI, TROW was at the bottom of the Bollinger Band and I sold the puts in anticipation of a bounce.  However in this case, unlike ADI the trade worked in my favor.  I was able to buy to close my puts just one week later on October 23rd at $0.30.

BLOG - TROW

Now let’s move on to November.  This past month I successfully closed two trades, one in AT&T (T) and the other in TJ Maxx (TJX).

On October 23rd I sold to open the NOV $33 puts for T at $0.36.  At the time T was trading at $33.49.

BLOG - T nov14

At November expiration T was trading at $35.28 and the puts expired OTM.

My last closed trade was in TJX.  On November 19th I sold to open the TJX DEC $57.50 puts at $0.65.  At the time TJX was trading at $61.35.

BLOG - TJX

A scant 6 days later TJX was at $64.24 and I was able to buy to close my puts for only $0.05.

That’s it for my closed trades.  My trade in VALE remains open and I am actively working to manage my position by selling covered calls and buying them back when the opportunity presents itself.

My newest open trade is in Occidental Petroleum (OXY).  I used the energy meltdown on Friday to sell the DEC $75 puts at $0.77.  At the time OXY was trading at $79.82.

Well that’s it for another month.  I’ll be back at the end of December with both a monthly and yearly update.

Happy trading.

Regards,

Troy

 

 

 

 

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