The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘INTC’

About my long-term holdings

Posted by mounddweller on January 3, 2018

Fellow Investors,

The post today is a few words regarding the long-term holdings portion of my portfolio.  Looking at the data in the “Long Term Holdings” tab you can see that I began accumulating these positions about 10 years ago.

My thought at the time was to begin accumulating large cap, dividend growth stocks at reasonable prices as the opportunity presented itself.  Then, I would automatically reinvest the quarterly dividends until such time as I was ready to retire and begin cashing those quarterly dividend checks.  Since these were ‘buy and hold forever’ stocks I tried to ignore month to month fluctuations in price.  I feel the plan has been successful.  The portfolio now has 15 stocks, 11 C-Corps and 4 MLPs.    My strategy has been to buy when the stock is currently out of favor.  Doing so has allowed me to buy AT&T at an average cost of less than $32/share, Exxon Mobil at $73, Intel at $24, McDonald’s at around $94, and Microsoft around $29.  With all of these companies increasing their dividends per share on an annual basis my yield on cost is substantial and will only continue to increase.

So, you may be wondering what I currently have on my watchlist.  As you might expect, given the current market conditions, not much!  However, there are a few companies that I would like to add to the portfolio if the opportunity presents itself.  IBM is one such company.  I’ve looked and passed on it multiple times in the past couple of years when the dividend yield exceeded 4%.  22 straight quarters of declining revenue make me a bit nervous to pull the trigger.  However, I think they may be very close to putting this bad string of results behind them.  If they have a good 4th quarter of 2017 and we get even a mild correction in the market, I’d buy a small number of shares at $150 or less.

Another stock I have my eye on is OKE.  It is a large mid-stream oil and gas pipeline company headquartered in Oklahoma.  It has excellent growth prospects and despite jumping in the first couple days of trading in 2018 still yields a very respectable 5.4%.  I didn’t anticipate it jumping out of the gate in the new year and so now will wait for it to cool off and pull back a little bit.  I will be pleased if I can get it at $53/share or less.

Well, that’s it for this post.  Later this week I hope to introduce you to the real estate portion of my portfolio.

Regards,

Troy

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August 2014 Results

Posted by mounddweller on August 29, 2014

Fellow Traders,

Well another month has passed us by.  This one seemed to pass by very quickly.  Let’s see how I did.

I closed 5 positions this month, 4 were winners and one was a loser.  Let’s put the bad news behind us and talk about the loser first.  Back in April of this year I bought JUL $VIX puts.  My rationale was that the VIX was very low and that we’d have a pullback at some point before July expiration after all the big shots on Wall Street headed for the Hamptons in late May.  Alas, the substantial pullback I felt was a certainty never transpired.  Instead the averages just kept plowing on to new highs and the $VIX got even lower.

In early JUL as expiration drew ominously closer I decided to roll my puts out by selling the JUL puts and buying AUG puts.  The total amount of capital I had in the trade at this point was $1,578.  Thankfully for me we finally got a small, quick pullback in early AUG which allowed me to exit the position with a loss of just $530.  Am I happy about the loss, definitely not!  However, it is a much better result than losing the entire $1,578.  I could have rolled out again and tried to wait out being able to exit at a profit but given the market’s trend to the upside I decided to just cut my losses and move on.

This was the 3rd time I’ve tried to trade the $VIX.  I’ve lost money 2 of the 3 times.  I doubt I’ll try this trade again anytime soon.  OK, enough said about the lone loser.  Let’s now look at my winners.

My four winning trades were in INTC, MAT, QCOM, and TGT.

Last month I told you about being called out of my long-term position in INTC with deep ITM covered calls at $27.  The other part of that original trade included more covered calls at the AUG $26 strike.  I got called away at $26 and ended up making 9.88% on the trade.  I still have some INTC left in my account that I hadn’t sold covered calls against.  I will look to add to that position in the coming months once INTC falls back into my buy range which is just under $30.

Now, let’s look at MAT.  You’ll recall I originally sold the AUG $35 puts at $0.35 and my plan was to take assignment if they closed ITM and then turn around and sell SEP covered calls and try to collect the $0.38 dividend, the ex-date of which was 8/25.  Well, at AUG expiration MAT closed at $35.08, thus my AUG puts expired worthless.  On the following Monday with the dividend ex-date only one week away I took another look at my options.  As it turned out premiums were far better for the SEP puts than they were for the calls even after accounting for the $0.38 dividend.  Thus, I decided to sell the SEP $35 puts for $0.70.  After going ex-dividend on 8/25 MAT fell through support at $35 and got to as low as $34.46 on 8/26.  On 8/27 it bounced so I decided to buy back the SEP $35 puts at $0.55.  Doing so got me out of the trade with a profit of 1.24% in 41 days.  I’m now looking for a good time to re-enter the position as I feel MAT is a true bargain at these levels.  I’m currently tracking the SEP and OCT $34 puts.  MAT closed today at $34.46.

Next up is QCOM.  Last month I mentioned that QCOM was taking me for a wild ride.  Thankfully the ride, while exciting, ended profitably.  I entered this position back on July 24th by selling the AUG $74.50 puts.  A week later I had to role these down to the AUG29 $74 puts.  Then just one day later I had to roll down yet again, this time to the SEP $72.50 puts.  I also had to increase the number of contracts to keep the trade in a net credit status.  It bottomed at $72.49 on August 7th and has been rising nicely ever since.  On 8/26 I bought back my SEP $72.50 puts at $0.13.  I ended up closing the trade with a net gain of 0.79% (about $180).

My last ‘closed’ trade is in TGT.  I have closed in quotation marks it isn’t officially closed yet.  I’m actually waiting on the dividend I captured to hit my account on 9/10.  On 8/15 I bought TGT at $58.06 and sold the AUG22 $58 calls for $0.61.  I had the stock called away from me on 8/22.  However, I still earned the $0.52 dividend.  My net gain on the trade will be 1.68% with a 26 day holding period.

That’s it for my closed positions.  However, I also opened some new positions this month as well.  I currently have open positions in KMI, MCD, TROW, and VALE.  All but VALE are on my long-term hold list.  With KMI I already have a small position that I’m hoping to expand by having sold the SEP $37.50 puts at $0.63.  I initiated a small position in MCD by just buying the stock outright.  I couldn’t find a decent covered call trade I liked to try to capture the dividend so I just bought it straight out.  With TROW I’ve been selling the $80 puts for a couple months now.  It goes ex-dividend on 9/10 so I’ll need to make a decision on it in the next week or so.  Last up is my brand new trade that I just entered today in VALE.  On the Yahoo message board I frequent they’ve been talking about VALE for quite some time.  It’s not on my list of tracking stocks but after hearing about all of the successful trades everyone was making in it I decided to give it a try.  Today I sold 10 VALE SEP $12.50 puts at $0.15.  We’ll see how everything turns out in about 3 weeks.  My plan is if assigned at $12.50 is to sell covered calls and try to capture the large, semi-annual dividend of $0.4075 dividend in October.  If the puts stay OTM I may go ahead and do a separate buy/write trade later in the month to try to capture the dividend.

Well that’s it for another month.  Happy trading.

 

Best Regards,

Troy

 

 

 

 

 

 

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July 2014 Results

Posted by mounddweller on August 9, 2014

Fellow Traders,

I’m slow to post my monthly results again.  I think it is partly the result of my apathy towards this market.  As I mentioned last month I’m finding it harder and harder to identify trades which meet my level of comfort with regard to risk vs. reward.

However, that being said I did do a few trades during the month of July.  Let’s see what my closed trades looked like.

I closed 5 trades in July, netting $1,357.84.  The bulk of my profits came from a long-held position in INTC.  You may recall back in April I sold JUL and AUG calls on INTC at strike prices of $27 and $26 respectively.  At expiration in JUL my shares were called away at $27.  This resulted in a gain of $851, over $4 per share.   I chose not to roll my options out and up simply because it has been my experience that chasing a stock up doesn’t work.  I’d rather allow the position to be called away and then start again fresh when the stock inevitably takes another dip.

My other closed trades in July were in LOW, GIS, NUE, and XLNX.  With LOW and XLNX I bought back my puts early, locking in a profit before expiration.  GIS and NUE were held to expiration and expired OTM.  My average holding period for the four trades was 16 days.  GIS was the longest held at 25 days and XLNX the shortest at 6 days.

In July I also initiated 3 new trades and rolled out one existing trade.  My new trades were in MAT, TROW, and QCOM.  The existing trade I extended by rolling out was in the $VIX.  More about that in a few weeks when I report my AUG results.  So here’s what my 3 new trades look like:

(1) On 7/17 – STO 4 MAT AUG $35 puts at $0.35.  I got in a little early but I liked this trade because MAT is oversold, beaten down, and has been left for dead.  Had I waited a few more days I could have gotten $0.50 for my puts.  MAT has strong support at $35 and pays a quarterly dividend of $0.38/share.  If MAT slips below $35 at expiration my plan is to take assignment and sell the SEP calls while capturing the next dividend on 8/25.  While MAT is not on my long-term hold wish list, should I be assigned I wouldn’t mind owning it at the current price and holding it until it recovered.

(2) On 7/24 – STO 1 TROW AUG $80 put at $1.35.  Clearly I was early on this one as well.  The stock has continued to move south since I sold my put.  On Friday it closed at $78.11.  Unlike MAT, TROW is on my long-term hold list.  I want to build a ‘hold forever’ position in TROW, reinvesting the dividends until I’m ready to retire and then living on them in retirement.  For this reason, should TROW close ITM I will accept assignment and begin collecting the modest, but rapidly growing quarterly dividend of $0.44.  It has increased its dividend every year for the past 27.  In the past 5 years the dividend has grown 76%, from $0.25 to $0.44/qtr.

(3) On 7/24 – STO 2 QCOM AUG $74.50 puts at $0.60.  This trade has taken me on a wild ride.  The first week I felt like a genius.  However, on 7/31 my puts went ITM so I immediately rolled down and out two weeks to the AUG29 $74 puts for a net credit.  However, you’ll have to wait until SEP to hear how the wild ride ends because on 8/1 QCOM took another dip and I had to roll further out and down to the SEP $72.50 puts.  I’m no longer feeling like a genius and hope that I’m able to extract myself from the trade with all of my money if not my pride intact.

Well that’s it for another month.  If I get so motivated and find some time I may post again this month telling you a bit more about the stocks in my dividend superstar list and which ones I’m looking to accumulate long-term for my retirement.

Best of luck to my fellow traders.  Be safe out there!

Regards,

Troy

 

 

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April 2014 Results

Posted by mounddweller on May 4, 2014

Fellow Traders,

My reportable results for April are kind of sparse.  I only closed 3 positions, netting a whopping $337.95.  The total capital employed in these trades was $35,750 with an average holding period of 62 days.  Needless to say the ROIC was anemic and well below my desired annualized return of 15%.  I closed trades in KMI, NKE, and TGT.

During the month of April I opened several new trades, all but one of which were on stocks that I’ve traded before.  I sold naked puts on four stocks BEN, FDO, KMI, and LOW.  Details are provided below:

(1)  BEN – STO 2 MAY $50 Puts at $0.70

(2) FDO – STO 3 MAY $55 Puts at $0.80 (after BTC 2 APR $57.50 puts at a small profit)

(3) KMI – STO 3 MAY $32.50 Puts at $0.50 (after my APR $32.50 puts expired OTM)

(4) LOW – STO 2 MAY $46 Puts at $0.75 (new trade, have never traded LOW before, hence modest amount of capital placed at risk)

I also opened covered call trades on EXC, INTC, and KO.  Long time readers will recall my long-held position and saga in EXC.  Barring a collapse in the market it appears I may finally be able to exit my position in EXC not only with all my capital in hand but with a small profit as well.  I also sold covered calls against my long-term holdings in INTC and KO.  This was done with the expectation that the market is entering a period of near-term weakness and that INTC and KO will drift lower with the market.  To date that has not been the case, however, with INTC I have until August to be proven correct and in the case of KO I am prepared to roll out my MAY calls as needed to prevent the shares from being called away from me.  Here are the specifics of the covered call trades I placed in April:

(1) EXC – STO 3 MAY $36 Calls at $0.50

(2) EXC – STO 2 MAY $35 Calls at $1.00

(3) INTC – STO 1 AUG $26 Call at $1.45

(4) INTC – STO 2 JUL $27 Call at $0.80

(5) KO – STO 2 MAY $40 Calls at $0.82

With both INTC and KO I purposely did not sell calls against all of my shares.  Doing so allows me room to generate additional income and exit the trade profitably without risking the loss of my shares due to assignment.

Last, but not least, I executed a trade on the $VIX calls.  I am following a strategy I learned from my good friend and fellow online trader, Teddi Knight at http://www.fullyinformed.com/.

(1) $VIX – BTO 3 JUL $14 Calls at $2.70

I may expand the size of this position if the VIX continues to drift lower and gets to the lower Bollinger Band.  However, depending on the timing I may make future trades against the AUG calls.  The plan is to sell these calls when the $VIX jumps and then begins to fall back.

Well, that’s it for this month.  I have been very selective in my trading of late because I am finding it harder and harder to find trades with a good risk/reward profile.  I think we may have a bumpy summer period and that may open up a lot of trading opportunities.

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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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

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New Trades

Posted by mounddweller on February 25, 2013

Fellow Traders,

I executed two new trades today in CAT and INTC.

Catepillar (CAT) is engaged in manufacturing heavy construction equipment.  It has a 52-wk range of $78.25 – $116.40.  Over the past few weeks it had fallen from $100 to close at $91.54 on Friday.  My investing buddy Teddi at www.fullyinformed.com noted in her weekend commentary that CAT appeared to be severely oversold.  Thus, I decided to give it a look.  CAT initially opened higher but then rapidly fell and found support just above $91.00.  I, in my usual fashion, tried to catch the exact bottom and ended up watching the stock move away from me.  After kicking myself for missing the opportunity I decided to keep an eye on CAT.  Later that morning I found CAT once again testing its previous lows and I was determined to not have a repeat performance of watching the opportunity pass me by.  I was looking at the MAR $90 put and wanted to get at least $1.30 for it.  However, in looking at the 3-month price chart (see below) I noticed a gap had occurred between the close on 12/31/2012 and 1/2/2013.  It has been my experience that stocks will often try to backtrack and fill the previous gap.  Thus, I decided an extra bit of caution was warranted.  So instead of selling the MAR $90 put I opted to sell the MAR $87.50 put for $0.63.

BLOG - CAT 3M Chart

After bouncing again off of support at $91 I felt pretty good about my trade.  But then Mr. Market began to wipe the smile off my face.  CAT sold off again and this time the support at $91 did not hold.  CAT ended the day at $89.16.  I am happy I decided to sell the $87.50 put rather than the $90 strike.

My second trade today was in a stock I’ve traded many times, Intel (INTC).  I want to build a significant long-term position in INTC.  I currently own just over 505+ shares and feel the $20 price is a good level to add to my position.  Thus, today I sold 5 MAR $20 puts at $0.25.  INTC was at $20.34 when I executed my trade.

BLOG - INTC 3M Chart

If INTC falls below $20 by MAR expiration I may elect to roll these puts for a couple of months to collect more premium and thus further reduce my cost basis.   If it stays below $20 as the next dividend date approaches I may choose to accept assignment in order to capture the dividend.

Good trading to one and all.

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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Update – INTC

Posted by mounddweller on October 28, 2012

Fellow Traders,

I want to update you on my INTC trade.  You’ll recall as OCT expiration approached I was short 5 OCT $24 puts and 5 OCT $22 puts.  As I wrote in my previous post (https://troysmoneytree.wordpress.com/2012/09/20/update-intc/) I decided if my OCT $24 puts were ITM at expiration I would accept assignment to position myself to receive the $0.225 dividend in early November.

So, I now own 500 shares of INTC at $24.  However, my net cost is $22.51 since I was able to collect $1.49 in put premiums from August through October.  The next step in executing my strategy for these shares will be to sell DEC or JAN calls at either the $23 or $24 strike.

With the OCT $22 puts I decided to roll out and down.  I bought back the OCT $22 puts for $0.34 and sold the DEC $21 for $0.54.  My plan will be to continue to roll these out and down as necessary to avoid assignment until such time as I have built up a substantial net credit.

Regards,

Troy

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Update – INTC

Posted by mounddweller on September 20, 2012

Fellow Traders,

I decided to roll-out my 5 INTC SEP $24 puts today to avoid assignment.  I looked at a couple different options (ha ha).

First I considered rolling out to DEC and down to the $23 strike price.  At the time the net credit was listed as $0.19.  That was a bit less than I was willing to take so I put in an order for $0.22 or better.  The primary benefit I saw in this trade was being able to lower my strike price while securing a net credit.  The downside was I had to go out to DEC to achieve it.

The other option I considered was the OCT $24 put where the net credit was listed as $0.22.  With this choice I got about the same amount of money but in about one-third the amount of time.

With these two choices in mind I looked at the following chart:

After looking at this chart which option would you pick?  I was leaning heavily toward the first one which I felt would leave me with a very good chance of avoiding assignment.  I felt sure with the decrease in the strike price I would have an opportunity to buy back the put on a rally in INTC or have it expire worthless.

However, the second option finally won out.  I decided that after having already sold two rounds of puts at the $24 strike I could sell one more with an OCT expiration and if INTC is below $24 at expiration I could accept having INTC put to me and position myself to receive the $0.225 dividend in early November.

So, here’s the trade I made.  I put in a trade to BTC 5 INTC SEP $24 and STO 5 INTC OCT $24 puts at $0.24 net credit or better.  It was filled late in the trading day.

Regards,

Troy

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