The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘Calls’

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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A New Tool for Your Option Toolbox

Posted by mounddweller on June 5, 2010

All,

Today I’d like to introduce you to a new tool I’ve recently added to my “Option Toolbox.”  It was developed by my fellow investing buddy, Patrick.  Patrick has just added a new feature to his Market Timing Research web-site (www.mtrig.com).   The new feature is a call and put options search tool.  With Patrick’s new tool you can search online for options which meet your desired criteria. 

You can search by: Market Sector (i.e., Utilities, Technology, etc.), Option Type (Call or Put), Desired ROIC (i.e., 1%, 2%, etc.), Expiration Date, Range of Stock Prices (ex. $10 to $50), Range of Price/Earnings Ratios (ex. 5 to 20), and Dividend Yield.

Patrick has purposely limited the universe of stocks in his searchable database to 734 large-caps; no small-caps allowed!  In our current volatile market environment I think that is a plus!  These are all well-established, more stable companies.

Search results contain the following fields: Stock Symbol, Stock Price, Option Type, Strike Price, Expiration Date, Last Traded Price of the Option, Bid and Ask Prices on the Option, Total ROI, Monthly ROI, Last Trading Day Volume, and the Open Interest.  The search results are displayed in a scrollable box on the screen.  Patrick has also provided a convenient way to export the search results to Excel.      In addition, you can quickly pull up a chart of the underlying stock.  The chart pops up in a new window.

So, why do I like this new tool?  Well, first and foremost, it is quick and easy to use.  Also, it is web-based so you can access it anywhere you have an internet connection.

Downsides?  Well, some might be disappointed with the limited number of stocks in the database.  However, as I mentioned above, I think this is a plus.  Also, this tool isn’t intended for you day-traders out there.  By that I mean that it is limited to closing prices.  In other words, if you run a search at noon on Monday, you will get the previous Friday’s closing prices.  This tool is more targeted towards the guy who gets home from work at night and wants to look for potential trades to enter the next day.

Here’s a link to the tool on Patrick’s site: http://www.mtrig.com/Members/OptionSearch.aspx.  Go check it out!  You’ll notice it is in a “members only” section of Patrick’s site.  However, because the tool is currently in BETA mode, access is free.  Once Patrick is done testing and adding an initial list of desired enhancements it will become a paid feature.  Speaking of which, if you do encounter a bug or data anomaly, let Patrick know.  He’ll get it fixed right away.  Also, if you have an idea for a cool addition to the tool, let Patrick know about that as well.  He’s already added a couple of my suggestions.

Regards,

Troy

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