The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘MCD’

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.



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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,








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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   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.



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