The Money Tree

Safely Generating Income in Retirement

Archive for the ‘Portfolio Updates’ Category

This category contains blog entries that discuss open positions in Troy’s “Money Tree” portfolio. In addition it contains blog entries on the historical performance of the portfolio.

March 2014 Results

Posted by mounddweller on April 3, 2014

Fellow Traders,

Better late than never I always say.  Other responsibilities have kept me from compiling and communicating the results of my trading during the month of March.

In March I closed out 6 trades with a net profit of $1,084.20.  The 6 trades required $72,835 in capital which means my ROIC was 1.488%.  The average holding period was 42 days.

I closed out NP trades in 5 stocks and 1 CC.  The NPs were:

(1) BEN MAR $50 puts expired OTM,

(2) KO MAR $37 puts expired OTM,

(3) WMT MAR $7.50 puts expired OTM,

(4) FDO MAR $60 puts expired OTM, and

(5) PG MAR $75 puts expired OTM.

My CC trade was in AT&T (T).  Back in January I had purchased 500 shares at $34.97 and sold CCs to capture the dividend.  The calls expired OTM and I received the dividend.  I then sold another round of calls and also sold puts at $33 and $32.  I closed the position last week after both my puts and calls expired OTM by selling my stock at $34.86.  All in all, it turned out to be a good trade.

I also have a few trades that rolled over into April.  I rolled my KMI $32.50 puts out from MAR into APR.  I also have pen NP trades in CSCO and TGT.  I am short the APR $21 and $57.50 puts respectively.

My only new trades in MAR that remain open are FDO APR $57.50 puts and my most recent trade which occurred back on 3/27 where I STO NKE APR $72.50 puts at $0.75.

With just over two weeks left before APR expiration I am keeping an eye on a couple possible trades:

(1) STO ABT APR $37 puts at $0.30 or better, and

(2) STO KO APR $37 puts.

 

Well, that’s it for the month of March.  Unless something big happens in the next couple of weeks it looks like I’m not going to have much to write about in April.

Best of luck to all my trading friends.

Regards,

Troy

 

 

 

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February 2014 Results

Posted by mounddweller on March 2, 2014

Fellow Traders,

February is now behind us.  After the 6% correction in January the market came roaring back in February.  We’re back at all-time highs on all the major indexes with the exception of the DOW which while recovering is lagging.

Let’s first look at the trades I closed this month.  I closed three trades, CLX, CSCO, and ADM.  CLX was closed on 2/5 at a loss of ($105.80).

BLOG - CLX Feb14 Result

This trade was a loser because I lost sight of the big picture and let my emotions get the best of me.  In addition, I didn’t fully follow my trade plan.  My trade plan called for rolling down and out as necessary to stay OTM on my strike price and to roll for a net credit.  I did this in my roll down and out from FEB to MAR expiration but when the stock rapidly fell to the new strike I let my fear of a big loss get the better of me and decided to close out the trade with a small loss.  I could have used the remaining capital I’d originally allocated in my trade plan to buy back the MAR puts and roll them out to the APR at the $82.50 put.  The better approach though might have been to remain calm and just given the stock another day or two to see what the market was going to do.  As it turned out the day I closed the trade was the bottom for CLX.  It since has run back up, closing Friday at $87.28.  Bottom line, had I been more patient I would now be sitting pretty instead of sitting on a loss.

I closed two CSCO trades in February, one of which was a quick 1-day trade.  As you can see on 2/13 I sold MAR $21 NPs for $0.22 but was able to buy them back the very next day for only $0.07.   My second CSCO trade was in the FEB $21 puts which expired OTM.  All in all it was a good month for me with CSCO.

BLOG - CSCO FEB14 Result

My final closed trade was in ADM.  I opened the trade on 1/23 and immediately had to roll down and out on 1/24.  Not a great way to start a trade.  However, by remaining calm and patient (why wasn’t I able to do that with CLX?) I was able to close out ADM with a solid gain.

BLOG - ADM FEB Result

Now let’s take a look at the 4 new trades I opened in February.  As you can see below I opened new trades in BEN, KMI, KO, and WMT.  The trades in KMI, KO, and WMT are all part of my long-term portfolio.  It is likely that at some point I will accept assignment in these stocks if my puts finish ITM.  At this point only KMI is at risk of finishing ITM at expiration.  My plan is to accept assignment only on a portion of the shares and roll the remaining contracts out to APR.

BLOG - FEB14 New Open Trades

Of my 5 remaining open trades 3 were opened in 2014 and 2 are hold-overs from prior years.  My trades opened earlier in 2014 include PG, T, and TGT.  The hold-over trades are in EXC and GDX.  Long time readers know my history in these two stocks.  EXC is finally approaching a break-even status after many months of being in the red.  GDX still has a very long way to go but it too is showing signs of life and I am hopeful that by year-end I will be in a much more favorable position with it.

My trades in PG, T, and TGT are a mixed bag.  I made a miss-step in my TGT trade.  Like my trade in CLX, I let my fear of a big loss cloud my judgment in how best to manage the trade once it began to move against me.  However, I remain confident I will close it for a profit, just a smaller one than I could have made had I been smarter.  PG is also well on its way to being closed at a profit.  It is well OTM with 3 weeks to expiration.  My last trade in T is my largest position.  I got into this trade too early but believe it too can be managed to a successful and profitable conclusion.

Well, that’s it for this month.  Best of luck to my readers this month as they trade in what I anticipate will continue to be a volatile market.

Best Regards,

Troy

Posted in Portfolio Updates | 2 Comments »

January 2014 Results

Posted by mounddweller on January 31, 2014

Fellow Traders,

Whew!  January is finally behind us.  If it is true that January generally dictates what’s going to happen in the remainder of the year, we’re going to have a wild ride in 2014.  For January, the Dow tumbled 5.3 percent and the S&P 500 slid 3.6 percent – their worst monthly percentage declines since May 2012.  It was the worst January in 4 years.  But for traders that also means there will be ample opportunities to generate substantial income through higher call and put premiums and short-term capital gains.  The key will be to remain nimble and not hang out in any one trade for too long.

I only closed two trades this month.  This is primarily due to having closed several trades at year end rather than letting them run to expiration.  My two closed positions this month were:

1) 2 CSCO JAN $20 puts which expired OTM, and

2) 2 TEVA JAN $37.50 puts which also expired OTM.

The CSCO puts returned 1.55% over a 60 day holding period while the TEVA puts returned 1.44% in 40 days.

Now let’s take a look at the trades I opened during the month.  The first one you already know a little about.  You’ll recall my last post was about my initial trade in Clorox (CLX).  As you might expect though given the recent volatility I’ve had to adjust the trade a bit as CLX like most everything else has begun to sell off.  Below is the transaction history for this trade thus far.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/2/2014 CLX SP Sold 1 FEB $87.50 Put   at $1.50  $           150.00  $             (7.45)  $             142.55
1/29/2014 CLX SP Sold 2 MAR $85 puts   at $1.60  $           320.00  $             (7.95)  $             454.60
1/30/2013 CLX BP Bought 1 FEB $87.50   Put at $1.45  $         (145.00)  $             (7.45)  $             302.15

Next up is Target (TGT).  I initiated this trade back on January 7th.  My thinking at the time was that the bad news had already been priced into TGT and given it had strong support at $62 that it would be a relatively safe trade to sell the FEB $60 puts.  Silly me!  TGT has done nothing but fall throughout the month.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/7/2014 TGT SP Sold 2 FEB $60 Puts   at $0.68  $           136.00  $             (7.95)  $             128.05
1/21/2014 TGT SP Sold 3 APR $57.50   Puts at $1.55  $           465.00  $             (8.45)  $             584.60
1/21/2014 TGT SP Bought 2 FEB $60 Puts   at $1.86  $         (372.00)  $             (7.95)  $             204.65

To rescue the trade I have rolled down to the $57.50 strike and out to the APR expiration while adding an additional contract.  I have not decided what to do from here as my APR $57.50 puts are now ITM as well.  The good news is that TGT appears to be trying to find a bottom at this point.  Today, with the DOW down over 150, TGT managed to close at $56.64, down only 3 cents on the day.

The same day I opened the trade in TGT I also opened a trade in AT&T (T).  The objective of this trade was to capture the $0.46 dividend, which I did successfully.  However, the rest of the trade hasn’t worked out quite so well.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/7/2014 T BS Bought 500 Shares T   at $34.97  $ (17,485.00)  $             (8.95)  $     (17,493.95)
1/7/2014 T SC Sold 5 JAN $35 Calls   at $0.13  $              65.00  $             (2.50)  $     (17,431.45)
1/14/2014 T SP Sold 2 FEB $33 Puts   at $0.56  $           112.00  $             (7.95)  $     (17,327.40)
1/14/2014 T SC Bought 5 JAN $35   Calls at $0.02  $           (10.00)  $             (9.45)  $     (17,346.85)
1/14/2014 T SC Sold 5 MAR $35 Calls   at $0.32  $           160.00  $             (2.50)  $     (17,189.35)

As you can see, in addition to doing the buy/write on 500 shares I also sold 2 FEB $33 puts.  T has strong support at $33 but with the recent volatility it has gotten as low as $32.01.  Next week I’ll receive $230 in dividends which will bring my net cash flow on the trade up to $534.60.

On January 16th I initiated my first trade ever in Proctor & Gamble (PG).  It too, has had its moments.  However, my trade is currently making money and the puts are OTM so I guess I can’t complain too much.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/16/2014 PG SP Sold 2 FEB $77.50   Puts at $0.78  $           156.00  $             (7.95)  $             148.05
1/30/2014 PG SP Sold 3 MAR $75 Puts   at $1.06  $           318.00  $             (8.45)  $             457.60
1/30/2014 PG BP Bought 2 FEB $77.50   Puts at $1.39  $         (278.00)  $             (7.95)  $             171.65

Next up on January 18th I entered into a trade in Cisco (CSCO).  My objective with CSCO is a bit different than the other trades I made this month.  All of the other trades were simply to generate cash flow via option premiums and dividends.  With CSCO, I want to accumulate and create a long-term holding of around 1,000 shares.  I would like to do this with a net cost per share of $19 or less.  Thus, I sold 5 FEB $21 puts at $0.37.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/27/2014 CSCO SP Sold 5 FEB $21 Puts   at $0.37  $           185.00  $             (9.45)  $             175.55

My plan is to continue to sell puts on CSCO each month until I have accumulated enough option premium such that my net cost will be less than $19/share.

My next trade was in Archer, Daniels, & Midland (ADM).  The objective of this trade was to simply generate premium income.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/23/2014 ADM SP Sold 2 FEB $40 Puts   at $1.01  $           202.00  $             (7.95)  $             194.05
1/24/2014 ADM BP Buy 2 FEB $40 Puts at   $1.72  $         (344.00)  $             (7.95)  $           (157.90)
1/24/2014 ADM SP Sold 3 FEB $39 Puts   at $1.23  $           369.00  $             (7.95)  $             203.15

Despite having to roll down and increase the number of open contracts, this trade is working out reasonably well.  It took a big tumble just one day after I sold the $40 puts so I had to roll down but was able to stay within the month of FEB.  ADM has fallen below $39 in the past week but has recovered enough to keep my puts OTM.

Last up is a failed trade in Wal-Mart (WMT).  Like CSCO, my objective is to begin collecting premium income until my net cost per share meets my targeted buy price.  Unfortunately, I am not off to good start in that regard with WMT.  Poor timing on my part had me buying to close the FEB $75 put before opening selling a new round of MAR $72.50 puts.  The stock ran away from me and I was unable to sell the MAR $72.50 for enough premium to give me a net credit from my roll-down on the FEB $75 put.

Trade Date Ticker Type Transaction Principal Commission Total Amount
1/23/2014 WMT SP Sold 1 FEB $75 Put at   $1.28  $           128.00  $             (7.45)  $             120.55
1/27/2014 WMT BP Bought 1 FEB $75 at   $1.62  $         (162.00)  $             (7.45)  $             (48.90)

The net result, as you can see, was taking a small, temporary loss.  I intend to recoup the loss and build a net credit by trying to better time my entry into the MAR $72.50 puts.

Well, there you have it.  I have had a relatively busy month.  In January I generated $1,312.85 in premiums (net of commissions).  Capital requirements totaled $126,035.

Best of luck to all of my readers as we head into February.

Regards,

Troy

 

Posted in Portfolio Updates | 2 Comments »

2013 Results

Posted by mounddweller on January 1, 2014

Fellow Traders,

2013 was a relatively good year for trading in The Money Tree portfolio.  Did I beat the market?  No, not by a long shot.  However, I was able to consistently generate small profits by selling naked puts and covered calls.  My overall ‘win’ percentage was the highest its ever been in seven years of trading  I closed 56 of 59 (94.92%) trades at a profit.  However, I wouldn’t be totally honest with my readers if I didn’t talk about what is not found in those results.  Regular readers know I struggled in 2013 with losing positions in EXC and GDX.  Since those trades remain open they are not included in my overall results.  On more than one occasion in 2013 I came very close to throwing in the towel on these trades.  However, after getting my emotions in check I decided to continue to work them back to a hopefully profitable close.

Notable trades in 2013 included CAT, CSCO, LNCO, and TEVA.  I successfully traded CAT 4 times in 2013 generating a net profit of $549.10.  CSCO was even more successful.  I had 5 trades in it for $651.40.  LNCO had 4 trades totaling $665.80.  Last, but certainly not least, was TEVA.  It was my most consistent and most profitable trading vehicle in 2013.  I closed 6 trades in TEVA with profits totaling $806.95.

Below is a listing of all 59 of my trades that I closed in 2013.

BLOG - 2013 Closed Trades p1

BLOG - 2013 Closed Trades p2

BLOG - 2013 Closed Trades p3

 

 

 

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December 2013 – Results

Posted by mounddweller on January 1, 2014

Fellow Traders,

Happy New Year!  While sitting in my easy chair and watching bowl games I’m going to take a moment to document the trades I closed in December.  In December I closed 7 trades in 6 stocks, $VIX, ABT, ADM, CSCO, OKE, and RYN.

(1) $VIX – This is one of the 3 trades that I closed for a loss in 2013.  The problem with this trade is that I waited too long to roll out my long calls.  Back on October 18 I BTO the JAN $13 calls.  According to the rules of the trade strategy I should have rolled them out to FEB/MAR when the premium had decreased by 20%.  Forgetting to do this, I let too much premium erode and when volatility did increase the increase in the premium was too little too late.  My inattentiveness cost me $255.90.

(2) ABT – On 12/31 I BTC 3 JAN $36 puts at $0.10.  I STO the trade back on 12/9, selling the puts for $0.46.  My ROIC for the 22 day holding period was 0.84%.

(3) ADM – On 12/23 I BTC 3 JAN $39 puts at $0.24.  I also STO this trade on 12/9, selling the puts for $0.63.  My ROIC for the 14 day holding period was 0.86%.

(4) CSCO – You’ll recall last month I told you about my setting up a put ladder in CSCO.  I sold puts with JAN, APR, and JUL expirations at the $20, 19, and 18 strikes respectively.  The objective of the trade was to eventually own CSCO at a net cost per share of < $20.  Since executing that trade CSCO has ran up substantially greatly reducing the premiums in my puts.  Consequently I decided to take some profit by buying back the APR and JUL puts.  My ROIC for the 47 day holding period was about 1.64%.

(5) OKE – This is the last of the 3 trades that I closed for a loss in 2013.  It was a very small loss of only $12.85, but a loss nonetheless.  This is a trade that I initiated back in May.  My original intent was to sell puts and accept assignment to establish a long-term position at a price at which I was comfortable owning the stock.  Events at the company caused the stock price to gyrate wildly.  I mistimed my recovery trade and then was left watching the stock run away from me.  I don’t have an interest in owning it at the current price so I chose to BTC my open puts for the small loss.  If OKE returns to my buy range I may consider selling puts again.

(6) RYN – Last up is Rayonier.  This is a long-term holding of mine.  Earlier this year they announced disappointing forward guidance and the stock sold off sharply.  Rather than just buying more stock outright I chose to sell an ITM put.  Doing so netted me $167.55.  My ROIC was 3.72% with a 35 day holding period.

Later today I’ll be updating the “Historical Results” tab to include the results of all of my trading in 2013.

Regards,

Troy

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November 2013 Results

Posted by mounddweller on December 8, 2013

Fellow Traders,

Yes, I have been very negligent in updating my blog.  My results of late have not been anything to write home about and so I cut way back on my trading activity and am conversing regularly with my good friend Teddi over at www.fullyinformed.com to see how I might improve my results.

However, that being said I do want to take a moment to document the few trades I did close last month.  In November I closed 4 trades in 3 stocks, CSCO, TEVA, and YUM.

(1) CSCO – 11/13 BTC 3 NOV $22 puts at $0.09.  Netted a whopping $91.10 for a 1.38% ROIC with a 28 day holding period.

(2) TEVA – 11/13 BTC 3 NOV $37.50 puts at $0.03.  Netted $124.10 for a 1.10% ROIC with a 14 day holding period.

(3) YUM – closed NOV puts at the $62.50 and $65 strikes.  Net result was a small loss of $2.25.

My only recent new trade was a put ladder in CSCO.  I am now holding JAN, APR, and JUL puts at the $20, 19, and 18 strikes respectively.  The objective of this trade is to eventually own CSCO at a net cost per share of < $20.  I like CSCO’s long-term growth prospects and recent commitment to supporting a growing dividend.

Finally, before signing off I’ll tell you I’m thinking of revamping my site to include updates on my long-term holdings.  More on that later.

Regards,

Troy

 

 

 

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Portfolio Update – October 2013 Results

Posted by mounddweller on October 31, 2013

Fellow Traders,

Happy Halloween.  We’ve survived the month of October.  While the month wasn’t boring it didn’t live up to its its reputation for extreme volatility.   Looks like we may have to wait a little longer for that long anticipated correction.

Now let’s take a look at how The Money Tree made out this month.

Number of Closed Positions: 7

Profit on Closed Trades: $1,094.70

Total Capital Used on Closed Trades: $62,471.60

Average Number of Days Trades Were Open: 28.4

Return on Invested Capital: 1.75%

Let’s dig a little deeper into these 7 closed trades.  Four of the seven closed trades involved naked puts.  Two were covered calls.  The last trade involved the purchase of VIX call options.  I had puts expire in ABT, T, and TEVA.  I also bought to close puts in CCJ for a small profit.

I sold the ABT SEP $33 puts on September 30 when the underlying was trading at $33.29.  By expiration ABT had popped up and closed at $37.29.

I sold the T $33 puts on October 3 for $0.38 when the underlying was at $33.71.  At expiration T was at $34.61.

While TEVA was at $37.73 I sold the SEP $37.50 puts for $0.58.  At expiration TEVA was at $40.00.

Regular readers will know that I’ve had an open trade in CCJ since early September.  I have been rolling the puts at the $19 strike.  I chose not to roll down during this time because I had confidence that the stock would eventually recover.  Today, with the stock at $19.22 I bought back my DEC $19 puts.

Now let’s look at my two covered call trades.  First up is my trade in KO.  Back on August 23rd I bought KO for $38.42 and concurrently sold the SEP $39 calls for $0.34.  On September 12th KO went ex-dividend making me eligible to receive the $0.28 dividend.  With KO trading at $38.94 on expiration day I decided to roll my calls out into OCT.  Doing so gave me an additional net credit of $0.62.  On October 1 I received the $0.28 dividend.  Then, on October 15 with the stock at $37.85 I bought back my OCT $39 calls for $0.03.  Doing so allowed me to close the trade having earned 2.94% ROIC capital in 53 days.

My other covered call trade was in Sysco Foods (SYY).  This was my first trade in SYY.  On September 30 I bought 400 shares of SYY at $31.93 and then sold the OCT $32 calls for $0.25.  At expiration I had my shares called away from me.  However, since I had owned the stock on the ex-dividend date I was eligible to receive the $0.28 dividend later that month on October 28.  My ROIC was 1.74% in 28 days.

My last closed trade involved the purchase of $VIX $13 calls at $3.80 and their subsequent sale for $4.60 a mere 13 days later.  This was my second successful VIX trade.  This time I made almost 19% ROIC in less than two weeks.

Now let’s look at my open trades.

Number of Open Positions: 7; 4 naked puts, 1 covered calls, and 1 call purchase

Net Cash Flow in October from 4 new naked put Open Positions: $356.50

Cash Flow from 1 covered calls: $171.55

Capital Used on Open Cash Secured Naked Put Trades: $51,000.00

Capital Used on Open Covered Call Trades: $11318.50

Capital Used on $VIX call option purchase: $760.00

Net Cash Flow on Invested Capital: 0.85%

I have previously opened positions in GDX, and OKE.  My new open positions are in CSCO (NOV $22 puts), YUM (NOV $65 Puts and DEC $62.50 puts), EXC (JAN $28 puts), TEVA (NOV $37.50 puts), $VIX (JAN $13 calls) and GDX (JAN $30 calls).

Going into November I have no potential trades to offer up.  The market is at elevated levels and I’m not comfortable selling puts on most of my usual candidates.  However, I am looking to possibly sell calls against my long-term positions in INTC and MSFT.

Regards,

Troy

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Portfolio Update – September 2013 Results

Posted by mounddweller on September 30, 2013

Fellow Traders,

The 3rd quarter is officially history.  Given the impact of a so-so economy and the political antics in Washington it should be interesting to see how we finish out the year.  Most of what I’m currently reading says to look for a big run-up to the end of the year after Congress gets done trying to get our attention on the budget debate and the debt ceiling.  Stay tuned it should be interesting!

Enough of that, let’s take a look at how The Money Tree made out this month.

Number of Closed Positions: 9

Profit on Closed Trades: $1,418.22

Total Capital Used on Closed Trades: $91,073.63

Average Number of Days Trades Were Open: 124.7*

Return on Invested Capital: 1.56%

You’ll note the average number of days trades were open is much higher than usual.  That’s because I finally closed out my position in SUNE (formerly WFR).  I had that position for well over 2 years.  We’ll talk more about SUNE later in this article.  Excluding SUNE, the remaining 8 closed trades had an average holding period of 33 days.

Let’s dig a little deeper into these 9 closed trades.  Seven of the nine closed trades involved naked puts.  The remaining two were covered calls.  All nine closed positions were the result of the options expiring OTM.  I had puts expire in ABT, CAT, CCJ, EXC, LNCO, MSFT, and TEVA.

I sold the ABT SEP $34 puts when the underlying was trading at $35.29.  ABT continued to fall and was ITM for some time before recovering and finishing OTM.

I sold the CAT $80 puts for $0.72 when the underlying was at $82.38.  At expiration CAT was at $84.75.

While CCJ was at $19.54 I sold the SEP $19 puts for $0.50.  At expiration CCJ was at $19.38.

I sold the EXC SEP $30 puts at $0.60 when Exelon was at $30.20.  The puts expired OTM with EXC closing at $30.13.

LNCO was at $25.55 when I sold the SEP $24 puts for $1.30.  At expiration LNCO closed at $29.04.

My trade in MSFT also turned out well, I sold the SEP $30 puts at $0.25 when MSFT was at $31.42.  They expired OTM with Microsoft trading at $32.79.

My final NP trade involved TEVA.  As regular readers know, I’ve been trading this one for several months now.  Once again I sold the SEP $37.50 puts; this time for $0.50.  At the time TEVA was trading at $38.81.  At expiration it closed at $37.72.  If you haven’t taken an opportunity to look at TEVA before, I highly encourage you to do so.  I’ve been trading it since late April and it has treated me very well.

Now let’s look at my two covered call trades.  First up is my trade in KO.  Back on August 23rd I bought KO for $38.42 and concurrently sold the SEP $39 calls for $0.34.  On September 12th KO went ex-dividend making me eligible to receive the $0.28 dividend.  With KO trading at $38.94 on expiration day I decided to roll my calls out into OCT.  Doing so gave me an additional net credit of $0.62.

Last, but certainly not least is my covered call trade in SUNE (previously WFR).  Long time readers know I’ve been in this position for quite some time.  NO MORE!  I closed out my SUNE trade on 9/25.  Over the course of 2+ years I had managed to work my net cost basis in SUNE down from $10 (the strike price of my original puts) to $7.74.  After my SEP $9 calls expired OTM I decided to keep a close eye on SUNE and sell my shares at $8 or better.  Last Wednesday, I got my chance and sold SUNE for $8.10.  My annualized ROIC was a laughable 1.91%.   However, I’m still proud of this trade because I stuck with it, didn’t give up, and worked on it until I was able to exit with a profit.  With more experience under my belt and better stock selection I hope to avoid a repeat performance.

 

Now let’s look at my open trades.

Number of Open Positions: 7; 4 naked puts, 2 covered calls, and 1 call purchase

Net Cash Flow in September from 4 new naked put Open Positions: $591.70

Cash Flow from 2 covered calls: $288.50

Capital Used on Open Cash Secured Naked Put Trades: $36,350.00

Capital Used on Open Covered Call Trades: $24,313.90

Capital Used on $VIX call option purchase: $760.00

Net Cash Flow on Invested Capital: 1.43%

I have previously opened positions in GDX, and KO.  My new open positions are in ABT (OCT $33 puts), CCJ (OCT $19 Puts), EXC (OCT $30 puts), TEVA (OCT $37.50 puts), SYY (CC OCT $32), and $VIX (DEC $13 calls).

Going into October I am considering an additional trade in CCJ (OCT $18 puts), and new trades in CAT (OCT $80 puts), CLX (OCT $80 puts), GIS (OCT CC trade, stock goes ex-dividend on 10/8), T  (OCT CC trade, stock also goes ex-dividend on 10/8), DE (OCT $80 puts), and PG (OCT $75 puts).

Regards,

Troy

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Results – August 2013

Posted by mounddweller on August 30, 2013

Fellow Traders,

Can you believe it’s already Labor Day weekend?  Where has this year gone?  All of the big boys on Wall Street will be back from the summer homes in the Hampton’s next week.  It should be interesting to see how we finish out the year.

Well, let’s take a look at how The Money Tree made out this month.

Number of Closed Positions: 6

Profit on Closed Trades: $1,040.15

Total Capital Used on Closed Trades: $43,133.73

Average Number of Days Trades Were Open: 21.2

Return on Invested Capital: 2.41%

Let’s dig a little deeper into these 6 closed trades.  Four of the six closed trades involved naked puts.  One was a covered call and the sixth one involved the purchase of calls; something I’d never done before.  The four naked put trades all expired OTM.  I had puts expire in EXC, LNCO, MSFT, and POT.  I sold the EXC AUG $30 puts at $0.40 when Exelon was at $30.55.  The puts expired OTM with EXC closing at $30.16.  LNCO was at $29.63 when I sold the AUG $27 puts for $0.60.  At expiration LNCO closed at $27.63.  My trade in MSFT also turned out well, I sold the AUG $30 puts at $0.39 when MSFT was at $31.06.  They expired OTM with Microsoft trading at $31.80.  My final NP trade involved Potash (POT).  With POT trading around $29.08 I sold the AUG $27 puts at $0.32.  Potash, at expiration, closed at 30.39.

Before we move on to my open trades let’s look at my two trades involving calls.  First up is my covered call trade in SUNE (previously WFR).  Long time readers know I’ve been in this position for quite some time.  Recently it has become more volatile and I’ve been able to take advantage and sell some calls to reduce my overall net cost.  This month I sold the AUG $10 calls at $0.68 when the stock was at $9.95.  I ended up buying back the calls for $0.02 after SUNE announced horrible quarterly results which drove the stock price down to $7.20.   After the stock recovered I sold another round of calls at the $9 strike.  More about this trade next month.

Last, but certainly not least, I want to briefly describe the purchase of my first call trade.  I entered this trade after reading about the strategy developed by my friend Teddie at www.fullyinformed.com.   It involves the purchase of calls when the $VIX drops below a pre-defined level.  I bought 5 OCT $13 calls on the $VIX at $4.30.  Later, when the $VIX was still languishing I bought another round of calls.  This time I bought 2 OCT $13 calls at $3.10.  This brought my average cost down to $3.98.  Earlier this week I sold the calls for $4.40.  My ROIC on this trade was over 10%.  However, I could have done even better if I had spread out my purchases into smaller lots at lower prices.  Also, as it turns out I exited the trade too early.  Today, the $VIX OCT $13 calls closed at $5.00 bid / $5.30 ask.  I’m not complaining though.  I made over 10% in 34 days.  When the conditions are right I will do this trade again.

Now let’s look at my open trades.

Number of Open Positions: 10 (in 9 stocks)

Net Cash Flow in August from 8 new Open Positions: $1,279.40

Total Capital Used on Open Trades: $76,152.78

Net Cash Flow on Invested Capital: 1.68%

I have previously opened positions in GDX, OKE, and SUNE.  My new open positions are in ABT (SEP $34 puts), CAT (SEP $80 puts), CCJ (SEP $19 Puts), EXC (SEP $30 puts), KO (SEP $39 CC), LNCO (SEP $24 puts), SUNE (SEP $9 CC), and TEVA (SEP $37.50 puts).

Going into September I am considering naked put trades in IBM, INTC, MCD, and POT.

Regards,

Troy

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Results – July 2013

Posted by mounddweller on July 31, 2013

Fellow Traders,

July is history.  Wow, 2013 is going quickly.  July turned out to be a good month.  Let’s check those results.

Number of Closed Positions: 7

Profit on Closed Trades: $1,272.00

Total Capital Used on Closed Trades: $71,350.00

Average Number of Days Trades Were Open: 24.6

Return on Invested Capital: 1.78%

Let’s dig a little deeper into these 7 closed trades.  All 7 of the closed trades involved naked puts.  Six of the seven expired OTM.  The other one was my ‘day-trade’ in POT which I wrote about yesterday.  I had puts expire in CHRW, CAT, KO, TEVA, and two positions in LNCO.  I sold the CHRW JUL $55 puts at $1.10 when CHRW was at $55.97 (it has strong support at $55).  The puts expired OTM with CHRW closing at $60.60.  CAT was at $83.86 when I sold the JUL $80 puts for $1.00.  At expiration CAT closed at $85.65.  My first time trading KO also turned out well, I sold the JUL $38 puts at $0.40 when KO was at $39.54.  They expired OTM with KO trading at $41.09.  Last up are my two trades in LNCO.  With LNCO trading around $30.70 I sold the JUL $27.50 and JUL $25 puts at $1.05 and $0.55 respectively.  It was a wild ride.  LNCO dropped to an intra-day low of $23.03 on July 5 before recovering to close on expiration at 32.18.

Now let’s look at my open trades.

Number of Open Positions: 7 (in 5 stocks)

Net Cash Flow in July from Open Positions: $(110.45)

Total Capital Used on Open Trades: $65,662.93

Net Cash Flow on Invested Capital: (0.168%)

Currently I have open positions in EXC, GDX, OKE, MSFT, and SUNE (WFR).   Let’s look at each one starting with EXC.  I just can’t seem to find the right rhythm with EXC.  If I weren’t wanting to re-establish a long-term position in this company I would have given up long ago and moved onto trading something else.  Long time readers will recall that I had a position in EXC that got called away in 2012.  Since then I have been trying to build a new position.  In May I started by selling the JUN $34 puts.  As EXC continued to move up more I feared having it run away from me so I lost my patience and bought 200 shares at $35.55 only to see it begin to fall almost immediately.  I ended up having to roll the JUN $34 puts out and down to JAN $33 for a small credit.  Then in June I sold more puts at the $32 strike.  As these went ITM I rolled them down and out as well to the JUL $31 puts.  When the JUL $31 puts went ITM I decided to cut my losses and bought to close them for a small debit.  Again, my patience cost me.  EXC bounced and closed at JUL expiration above $31.  Had I been more patient they would have expired OTM.  Finally, to finish the EXC saga for this month, today I sold some AUG $30 puts at $0.40 in an effort to reduce the debit I created when I closed the JUL $31 puts too early.  All of this activity has put me at just about at break-even.  The only one getting rich on this trade is my broker.

Let’s move onto my remaining open trades.  I won’t bore you with any more details on GDX.  It continues to hover between $26-$28.  I am way under water on this trade.  Next up is OKE.  Like, EXC I’m having trouble figuring this one out.  This is another company I’m trying to establish a long-term position in.  Back in May I sold JUN puts at the $47.50 strike.  Shortly thereafter the bottom fell out on the stock and I ended up rolling my position down and out to the JAN $45 puts for a $0.30 net credit.  Then in June I sold another round of JUL puts at the $42.50 strike.  When OKE fell below $42.50 I decided to close that position and began looking to sell something else further out and down for a credit.  Alas, like with EXC, had I just been patient the JUL $42.50 would have expired OTM.

OK, not all of my open positions are basket cases.  I actually have two open positions that are performing well.  I am short MSFT AUG $30 puts.  I opened the trade on July 19 selling the AUG $30 puts for $0.39 while MSFT was at $31.06.  I have no reason to believe these won’t expire OTM.

My last open position is in SUNE (WFR).  You’ll recall last month that I mentioned that I had sold the JUL $10 calls at $0.25.  These ended up expiring OTM so I wrote another round of calls for August also at the $10 strike.  I was able to sell these for $0.68.  SUNE has been on both sides of $10 this week so time will tell if I’ll get called away at expiration or be able to write another round of calls.

 

Going into August I am considering another round of naked put trades TEVA, CAT, CHRW, and CCJ.  All are once again approaching key support levels.

Regards,

Troy

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