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Safely Generating Income in Retirement

Posts Tagged ‘GLW’

Monthly Results – March 2013

Posted by mounddweller on March 29, 2013

Fellow Traders,

You’ll recall a couple months ago I started a new series of posts summarizing my monthly trading results.   The last trading day of the month being behind us let’s take a look and see how I did.

Number of Closed Positions: 5

Profit on Closed Trades: $1,041.80

Total Capital Used on Closed Trades: $69,790.00

Average Number of Days Trades Were Open: 30

Return on Invested Capital: 1.49%

OK, before I move on to the stats for my open trades, let me tell you a little more about these closed trades.  Of the 5 closed trades, 3 were naked puts and 2 were covered calls.  2 of the 3 naked puts trades (CAT and INTC) expired OTM.  The third, EXC I bought to close after 25 days (out of a total of 36 DTE) when I had captured 75% of the total premium.  One of the two covered call trades (COH) started out as what one of my friend and  investing mentors, Ron Groenke calls the “Double Up” strategy.  This is where you do a covered call and sell naked puts on the same stock with the same expiration date.  The other covered call trade (GLW) was a straight buy/write.  All 5 trades were closed for a profit.

Now let’s look at my open trades.

Number of Open Positions: 5

Net Cash Flow in March from Open Positions: $440.15

Total Capital Used on Open Trades: $76.050.00

Net Cash Flow on Invested Capital: 0.58%

The return on invested capital for my open positions is lower than normal this month because 2 of my 5 positions were initiated in prior months and did not generate any new income.  One of the two (POT) was initiated in late February and the other is GDX which I have been trying to profitably work myself out of for a few months now.  The return on invested capital for new open positions is a more normal 1.09%.

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

Regards,

Troy

Posted in Portfolio Updates | Tagged: , , , , , , , , , | 4 Comments »

New Trade – GLW

Posted by mounddweller on February 10, 2013

Fellow Traders,

On Friday I entered a new position in Corning (GLW). I executed this trade after watching GLW for the past few weeks. GLW has fallen since hitting $13 in early January. It continued to sink and trace a path along the lower bollinger band finally bottoming at $11.79 on Monday, February 4. On Tuesday the stock bounced off the lower bollinger band and began to move higher. I continued to watch the stock proceed higher on Wednesday and Thursday. By Friday I feared that I had missed my opportunity. However, on Friday morning the stock pulled back and I swooped in buying 1000 shares at $12.14. At first I had tried executing a buy/write for a net debit of $11.78. However, I was unable to get a fill.

I then changed my strategy. I decided to try to time my entry by buying the stock near the bottom and then waiting to sell calls as the stock reached an intra-day overbought condition. Yes, this was a risky move on my part. There were no guarrantees that the stock would move back up at some point later in the day. However, given the previous 3-day rally in the stock I thought it was worth a chance. As it turned out, I was right. I was able to buy the stock as it bounced off its lows of the day. As I mentioned above I bought 1000 shares at $12.14 at 10:59 a.m. Then using a 1-minute price chart and Williams %R I was able to sell the MAR $12 calls at $0.45 around 3:17 p.m. You can see I missed my best chance to sell the calls a short time earlier. Greed got the best of me and I waited too long trying to get one more penny for my calls. Thankfully, I was given a second chance before the market closed to sell the calls at a good price.

BLOG - GLW 1 day chart

Let’s look at my potential profit on this trade.  By buying the stock at $12.14 and selling the MAR $12 calls for $0.45 I have the potential to make a net of $0.31 per share.  My ROIC is 2.55%.  That’s a nice return.  However, it gets even better.  GLW is expected to declare a $0.09 dividend before expiration on March 16th.  If my calls are not exercised early and I am also able to capture this $0.09 dividend it will boost my ROIC to 3.29%.

Best of luck to all my trader friends in the coming week.

Regards,

Troy

Posted in Troy's New Picks! | Tagged: , | 4 Comments »

Recent Trades

Posted by mounddweller on October 1, 2011

Fellow Traders,

I want to update you on some of my recent trades.  Since I last provided an update I have added to one position and opened three more positions.  First, let me update you on my NP position in Petroleo Brasileiro (PBR).  You’ll recall I initiated this position back in May by selling JUN $32 puts.  You can read my write-up about why I entered the trade here: https://troysmoneytree.wordpress.com/2011/05/24/new-np-trades-2/.  From May through July this trade was working wonderfully.  My puts would expire OTM and I would then rewrite them the following month.  Since August the trade has not been working so well.  PBR has declined steadily and I have been rolling my puts at the $31 strike price.  I am now short the JAN $31 puts.  I will continue to roll these puts as long as possible until the price of PBR recovers.

Because PBR has declined substantially and I still believe it is a compelling value I have chosen to sell additional puts at the $20 strike price.   On 9/22 I sold OCT $20 puts at $0.33.  At the time PBR was trading around $23.45.  Yesterday, it closed at $22.45.  The 5-year chart below will show you while I chose the $20 strike price.

Even during the financial crisis in late 2008 PBR didn’t fall much below $20.  Also, at $20 PBR would be trading at 74% of its book value.  My plan is to continue to sell puts at the $20 strike price until PBR begins to recover.  If it should continue to fall below $20 I will begin rolling the $20 strike price puts as well.  I will then commit the last of my planned capital for this trade at a new lower strike price, perhaps at the $17 strike price.

OK, let’s move on to my new positions.  My new positions are in Corning (GLW), Annaly (NLY), and Microsoft (MSFT).  GLW was brought to my attention by an investing buddy of mine.  He is very conservative so when he thinks a trade is nice, I listen.   On 9/22 I sold OCT $10 puts at $0.13.  At the time GLW was trading at $12.25.  This trade gives me a 1.16% ROIC (net of commissions) with almost 20% DSP.  Below is the 5-year chart for Corning.  The $10 strike price is very near the bear market lows.  Other factors leading me to make this trade are GLW’s over $2.60/share in cash (net of all long-term debt) on its balance sheet, its book value of $13.56, and its P/E ratio of 6.

This week I made my two other new trades.  I sold NLY NOV $16 puts for $0.38.  I sold these puts after NLY went ex-dividend.

My last trade was in MSFT.  I sold OCT $23 puts at $0.32.  Net of commissions my ROIC for this trade is 1.3%.  The following 2-year chart shows why I like this trade.

Well, now you are all caught up.  As you can see I am always on the look out for good trades outside of those generated by my two NP strategies.  As the current market volatility continues I will be on the look-out for other good trades.

Best of luck to you in the weeks ahead.

Regards,

Troy

 

Posted in Portfolio Updates | Tagged: , , , , | 4 Comments »