The Money Tree

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Posts Tagged ‘CCJ’

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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April 2013 Results

Posted by mounddweller on April 30, 2013

Fellow Traders,

You’ll recall earlier this year I started a new series of posts summarizing my monthly trading results.   Today being the last trading day of the month let’s take a look and see how I did.

Number of Closed Positions: 4

Profit on Closed Trades: $447.50

Total Capital Used on Closed Trades: $46,600.00

Average Number of Days Trades Were Open: 27

Return on Invested Capital: 0.96%

OK, before I move on to the stats for my open trades, let me tell you a little more about these closed trades.  All 4 closed trades were naked puts.   Half expired OTM and half I bought back before expiration at a profit.  I had CSCO puts at the $20 strike and POT puts at the $37 strike expire OTM.  ITW and KSS I bought back early, both for $0.05.

Now let’s look at my open trades.

Number of Open Positions: 6

Net Cash Flow in April from Open Positions: $355.05

Total Capital Used on Open Trades: $71,050

Net Cash Flow on Invested Capital: 0.50%

The return on invested capital for my open positions is much lower than normal because I did a poor job of managing them.  I waited too long to roll out my GDX position.  This resulted in having 300 shares put to me at $40.  Because of this I was not able to generate any cash flow by rolling out my NPs.  Neither was I reasonably able to sell covered calls on my new long position unless I wanted to sell them far, far out in time or way ITM.  I also did a poor job of rolling out my open positions in CAT and NUE.  While I was able to roll-out for net credits in both cases, they were small net credits.   My other open positions are as follows:  CSCO MAY $19, TEVA MAY $37.50, and CCJ MAY $19.

I am cautiously optimistic heading into May.  Best of luck to all my readers!

Regards,

Troy

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Yes, I am still alive…

Posted by mounddweller on December 30, 2012

Fellow Traders,

OK, I was totally shocked and embarassed when I logged into my blog earlier this afternoon.  I could not believe that 2 months had passed since my last post!  Yes, I did realize that I had not been as diligent in posting every week (at a minimum) as I had in the past.  However, I had no clue that I had let so much time slip past me since my last blog entry.

So, let’s get y’all caught back up to date on my trading activities these past 60+ days.  In looking back at my last posts I found that I had written about trades in INTC, CSCO, and CCJ.

First, a quick update on INTC.  As I mentioned in my previous post I accepted assignment on 500 shares at $24.  My net cost on this position is $22.51.  You’ll also recall I had a second trade open having initially sold a round of puts at the $22 strike price.  Just prior to October expiration I rolled these down and out to the DEC $21 strike.  Then, just prior to DEC expiration I rolled them out again, but not down, to the JAN $21 expiration.  If the sell-off continues into the new year my plan at JAN expiration will be to once again roll down and out as necessary to obtain a net credit. It is likely that this will be the MAR expiration at the $20 strike.

Next, let’s get you caught up on CSCO.  You’ll recall I opened my most recent trade on CSCO back on 10/19 by selling NPs at both the DEC $16 and NOV $17 strike prices.  The NOV $17 NPs expired OTM so I rewrote a new round of DEC $17 NPs.  CSCO had a good run-up in late November and early December so I was able to buy to close both of the open DEC positions well before expiration.  I currently do not have an open position in CSCO.

Lastly, let me give you a quick update on CCJ.  On October 12 I sold to open NOV NPs on CCJ at the $18 strike.  Just prior to NOV expiration I rolled these out to JAN expiration, keeping the $18 strike price.  CCJ recovered quite nicely in December and I was able to profitably close the position on 12/19 by buying to close at $0.05.

As we start into the new year I hope to be able to get everything on my blog back up to date.  My closed trades and open position pages are totally out of date.  In addition I need to update the page explaining my trading plan.  It no longer reflects how I identify and execute my trades.

Best of luck to one and all as we head into what looks to be an exciting 2013.

Regards,

Troy

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New Trade – CCJ

Posted by mounddweller on October 14, 2012

Fellow Traders,

I opened up a new position in Cameco Corporation (CCJ) on Friday.  Specifically, I sold to open 5 NOV $18 puts at $0.40.  I think once you see the 1 and 5 year charts on CCJ you’ll see one of the reasons I like this trade.  So here you go…

In both cases you can see CCJ is nearing lows.  What you can’t see, but I’d encourage you to check out for yourself is the MACD and Stochastics on CCJ.  Both, in my opinion, suggest the sell-off has just about ran its course.

CCJ also has good fundamentals.  Over the past 5 years it has doubled it’s quarterly dividends while maintaining a low payout ratio of only 35%.  It’s forward P/E is a very reasonable 12.  Cash and L/T debt are virtually even.

Even though CCJ is not a stock I’m planning to own long-term I always look at the fundamentals to make sure I would be comfortable owning it if my trade doesn’t work out as planned.

In this case, barring a meltdown in the overall stock market, I do not see CCJ falling much below $19.  So, if my puts expire worthless as I plan I will have made 2.22% ROIC with a holding period of about 35 days.

Oh, one final note.  This is not my first rodeo with CCJ.  Twice last year I sold NPs on it.  The first time at the $25 strike price and the second time at the $16 strike price.  The $25 strikes I was able to buy back for $0.05 and the $16 puts expired worthless.

Regards,

Troy

 

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New Trades – Part Two

Posted by mounddweller on November 11, 2011

Fellow Traders,

Let’s get right to it.  Yesterday, I told you I recently entered 4 new trades and discussed one of them, Waste Management, with you.  In this post I’m going to tell you about my other three trades, one with Cameco (CCJ) and two with the Royal Bank of Canada (RY).

First, let’s look at Cameco Corporation (CCJ).  Cameco Corporation operates as a uranium producer, supplier of conversion services, and fuel manufacturer.  The company was founded in 1987 and is headquartered in Saskatoon, Canada.  This is not the first time I have traded CCJ.  I sold puts on CCJ back in March of this year.  You can read about that trade here: https://troysmoneytree.wordpress.com/2011/03/24/new-np-trade-ccj/.

Here’s my most recent trade.  On November 9th I sold 5 DEC $16 puts at $0.25.  At the time CCJ was trading at $19.44. Thus the $16 strike gave me 17.7% of DSP.  My ROIC, net of commissions on this trade is 1.43% with 38 days to expiration.  Annualized my return is 13.69%.  This is slightly under the 15% targeted return I referenced in my message yesterday but is still far better than money market or bank CD is paying.

Let’s look at the chart for CCJ and see why this trade caught my eye.

As you can see the price chart for CCJ is similar in many respects to that of WM which we discussed yesterday.  CCJ hit a 52-wk high of $44.81 back in February and then fell precipitously after the earthquake and tsunami in Japan.  Last month it hit bottom with a 52-wk low of $16.68.  It then bounced back up to around $23 before retreating again.  Yesterday, it closed at $19.38.

Here’s why I like this trade.  I think CCJ is oversold due to fallout from the Japanese earthquake.  CCJ mines uranium.  Nuclear power is not going the way of the dodo bird.  It will be around for a long time.  As a matter of fact CCJ is so confident of this it plans to double production by 2018.  If I have CCJ put to me at $16 I will own it below the current 52-wk low and very near the 2008 market lows.  It pays a modest dividend that has been steadily increasing for years.  CCJ currently yields 2%.  At my $16 strike it will have a dividend yield of 2.4%.  Not great, but again higher than short-term bond yields.

Last, but certainly not least, I’d like to tell you about my two recent trades in the Royal Bank of Canada (RY).  I have had my eye on RY for several months now.  RY is a favorite of my friend Teddi over at http://www.fullyinformed.com/.  Teddi has written about RY many times.  One of her most recent postings can be found here: http://www.fullyinformed.com/royal-bank-stock-learn-bear/.

As I mentioned I have entered two separte trades on RY.  First, on November 1st I sold 2 NOV $45 puts at $0.80.  With 18 days to expiration net of commissions my ROIC is 1.68%.  Annualized that comes out to a return of 33.99%.  Then, with the stock continuing to exhibit further weakness, on November 9th I sold 2 DEC $40 puts at $0.75.  My ROIC, net of commissions, on this trade is 1.76% (16.91% annualized).

Looking at the chart you can see why I like these trades.  RY is a blue-chip Canadian bank.  It has fallen significantly due to the sovereign debt crisis in Europe.  However, todate there has been no indication that they have much exposure to this problem.  The stock is trading at 2 year lows.  Does that mean it can’t fall further.  No, certainly not.  During the financial crisis in 2008/2009 it did fall much lower.  However, what is important to note is that it quickly rebounded.

RY is a slightly different trade from my normal NP trades in that I want to own RY long-term.  It pays a large ($2.15 / 4.70%)and increasing dividend.   I would eventually like to own several hundred shares against which I can collect dividends and sell covered calls.  My strategy with RY will be very similar to that of my position in Exelon (EXC).

Well, that’s all I’ve got time for this time around.  I hope you will take time to do your own DD on these trades.  I especially like the WM and RY trades.  You may find them suitable for your trading portfolio as well.

Regards,

Troy

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New NP Trade – CCJ

Posted by mounddweller on March 24, 2011

Fellow Traders, 

Today I executed a new NP trade on the world’s largest uranium miner, Cameco (CCJ).  I put Cameco on my watchlist shortly after hearing about the disaster in Japan.  However, when I first looked at the chart and the options premiums I didn’t like the risk/reward ratio.  After reading this trader’s commentary (http://www.growthstockwire.com/) today I took another look at it.  I didn’t like Jeff Clark’s trade but decided I would take another look at the option tables to see if I could find something I liked better.  I found I liked the MAY $25 strike at $0.50.  So here’s the trade I made:

STO 4 MAY $25 puts at $0.50

This trade gives me a 2% ROIC with 58 DTE and over 22% DSP.  Jeff’s trade of the JAN ’12 $17.50 puts at $0.50 has a better ROIC and more DSP but ties up your capital for a much longer period of time.  If you check out the trading volume on Jeff’s recommended trade you’ll see a lot of lemmings followed his advice.  So much so that they significantly drove down the price of the put.

Haven’t seen any other compelling trades this week.  Best of luck to all of you out there.

Regards,

Troy

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