New Trade – QCOM

 

 

Fellow Traders,

Yes, it really is me and I’m really going to post something to my blog.  My apologies for the extended hiatus.  The reason I haven’t posted anything of late is because I haven’t been doing any trading.  I’ve continued to follow the market but wasn’t finding anything that I felt was worth risking my hard earned money on.

The increased volatility is starting to make that change.  More and more stocks are selling off from their multi-year highs and are beginning to hit major levels of support, either in the form of a 200 day moving average or previous support levels.

Today I used the huge selloff in QCOM to stick my toe back into the water so to speak.  I started with a very small trade, selling only 2 contracts of the QCOM FEB $60 put for $0.65.  If the puts expire OTM my ROIC will be 1.08%.  With only 23 days to expiration my annualized return is 17.2%.

Below is a 3-yr chart for QCOM.  As you can see there is plenty of support for QCOM at $60.

I executed my trade very early in the trading day.  At 9:38 am ET to be precise.  Hindsight being 20/20, as you can see in the 1-day chart, it is clear that I was early in the trade.  Had I waited until later in the day I would have been able to get a great deal more for the FEB $60 contract.  However, at the time of my trade QCOM was at $64.42, 9.3% below the previous day closing price of $70.99.  That’s a huge one-day drop for a blue-chip stock like QCOM.  I felt QCOM couldn’t fall much further.  Also, since I still have a day job I couldn’t sit and stare continuously at my trading platform waiting for the stock to hit the very bottom for the day.

By the end of the day QCOM finished well off its lows.  Thus, I am very comfortable with my entry point.

My plan is to buy back the puts at $0.10 or less before expiration.  If QCOM closes below $60 before expiration I will roll the puts out and down, possibly adding more contracts as necessary to maintain a net credit on the trade.  However, given the current ‘up one day, down the next’ volatility we’re experiencing right now in the market I don’t think that will become necessary.  I think QCOM will bounce significantly before expiration.

Best Regards and Good Trading,

Troy

 

 

 

 

 

September 2014 Results

Fellow Traders,

There isn’t much to report for the month of September.  The level of activity at work has severely curtailed my trading.  This is both a good and a bad thing.  Good in that it has allowed me to miss several ‘opportunities’ which likely would have resulted in a bad trade and would have put me in a rescue mode.  Bad in that I did make a few snap decisions which I’m now regretting.  Let’s first look at the trades I closed in September.

I closed 3 trades in September.  They were in KMI, TGT, and TROW.  KMI is a stock in which I’m looking to build a long-term position.  I have been trading naked puts in KMI since February.  The range of puts I have sold has been $32.50 – $37.50.  In September I had 2 SEP $37.50 puts expire OTM.  This trade netted me $118.05 with a ROIC of 1.57%.  I kept the trade very small because I felt KMI might fall further and I wanted to be able to roll out and down while increasing the number of contacts as necessary.  That didn’t happen so I’m happy with a small profit.

Next up is TGT.  My TGT trade started back in early August as a buy/write in order to capture the dividend.  I bought the stock at $58.06 and sold the AUG $58 calls.  The calls were exercised and I had the stock called away from me at expiration and after the ex-date.  The dividend landed in my account on September 10.  This trade was also small, only a couple hundred shares.  I netted $195.10 and my ROIC was 1.68%.

My last closed trade was in TROW.  TROW is another stock in which I’d like to build a long-term position.  Back in July I began this effort by selling the AUG $80 put.  TROW fell significantly in AUG and rather than accept assignment I decided to roll the AUG puts out into SEP.  TROW subsequently recovered and the SEP $80 puts expired OTM.  This trade netted me $216.60 and my ROIC was 2.71%.  I am now waiting to reenter the trade with NOV expirations being the target.

Now let’s take a look at the new trades I opened in September.  Actually one, VALE is a trade I opened in late August.  You’ll recall I sold the SEP $12.50 puts for $0.15 and said I’d let the stock be put to me if they expired ITM.  The purpose of doing so was to be long the shares and in a position to capture the substantial $0.40 semi-annual dividend whose ex-date is October 17.  The trade started out as planned but has fallen much further than I anticipated.  I am now sitting on a substantial unrealized loss as I bought the stock at $12.50 and it closed today at $11.31.  This, however, is an improvement over its low last week of $10.61.  My plan remains to sell $12.50 calls after it recovers and I’ve earned the dividend.  Now it just looks like it’ll take a bit longer than I originally anticipated.

My new open trade is in ADI.  Specifically, I sold the OCT $49 puts at $0.75.  This is one of those cases where I took my eye off the ball and let the trade run away from me.  My original intent was to sell the puts as the result of the stock hitting and bouncing off the lower Bollinger Band.  The trade was to end when the rebound petered out and I had captured a large portion of the initial premium.  Unfortunately as I mentioned at the beginning of the post I’ve been very busy at work and I missed the turn in the stock.  ADI got as high $50.64 after bouncing off the lower Bollinger Band at around $48.72.  Today, ADI closed at $47.15.  Unless we have a big bounce in ADI before expiration, I’ll need to roll this position out and down.  I’ll likely increase the number of puts in the trade and roll down to the $48 strike.

So there you have it.  That’s the extent of my trading during September.  Best of luck to everyone as we head into the historically volatile month of October.

Regards,

Troy

 

 

August 2014 Results

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

 

 

 

 

 

 

July 2014 Results

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

 

 

June 2014 Results

Fellow Traders,

A belated Happy Independence Day to you!  I hope each of you has had a wonderful holiday relaxing and enjoying good food, drink, and the company of friends.

To be honest I don’t have much to report this month.  Several factors limited my trading activity not the least of which is the height of the market and the record lows in the $VIX.

I only closed two trades in June.  On May 20th I sold 3 JUN EXC $33 puts at $0.35.  At expiration on June 21st these puts expired OTM.  The result was a small gain of $96.55 with a net ROIC of 0.98%.  My other closed trade was in Nucor.    On June 4th I sold two 27JUN $49 puts at $0.55.  These barely expired OTM with NUE trading at $49.09 on Friday, June 27th.  My profit was $102.05 with a net ROIC of 1.04%.

During the month I opened two new naked put trades.  On June 24th I sold 2 JUL GIS $52.50 puts at $0.50.  Also, on June 30th I sold 3 JUL NUE $48 puts at $0.56.

As I mentioned at the beginning of this post it is becoming increasingly difficult to find trades which meet my risk / reward criteria.  The $VIX is so low that the only trades with any premium are close to ATM or are on risky stocks.  Thus, I’ve limited my trades to ones where the high quality stock appears to be bouncing off the lower Bollinger band (BB).

That’s it for this month.  Best of luck to everyone one in the coming month.  Be ever vigilant!  A correction could occur when we least expect it.

Regards,

Troy

 

 

 

 

 

 

 

May 2014 – Results

Fellow Traders,

My results in May were kind of a mixed bag.  I had some trades that worked well and others that didn’t.  The frequency of my trading was impacted by several factors:

(1) responsibilities at my day job increased and so I have less time to follow my trades during the day,

(2) my personal life has also become more hectic, and

(3) the seemingly irrational movement down in volatility means premiums are very low and thus the risk/reward ratio does not seem favorable to me.

With that as a back-drop let’s look at the results of the trades I did make this month.  First, let’s look at the closed trades.

(1) Coca Cola (KO) – I am building a long-term position in KO.  While accumulating shares using dividend reinvestment I also want to be opportunistic in selling CCs against my existing shares and selling NPs until assigned to acquire additional shares.  On 4/16 I sold MAY $40 calls at $0.82 believing that KO had peaked and was destined to head back down for a short period of time.  Unfortunately, this was not the case and so on 5/14 I had to buy back my MAY $40 calls at $1.14 to avoid having them called away.  This resulted in a loss on the trade.  I am planning on re-entering the trade again when it appears KO has peaked and is ripe for a short-term fall.

(2) Kinder Morgan (KMI) – Like KO, I want to build a long-term position in KMI.  I feel KMI is a bargain at current price levels.  Consequently, for the past several months each time KMI approaches $32.50 I sell puts at this strike price.  On  4/25 I sold MAY $32.50 puts at $0.50.  These puts expired OTM on 5/14.  Thus, net of commissions my ROIC was 1.45% with a holding period of 22 days.

(3) Family Dollar (FDO) – I have made a couple of trades in FDO in the past 3 months.  Both were profitable.  My latest trade was initiated on 3/21 when I sold the APR $57.50 puts for $0.96.  As many of you are aware FDO has been volatile these past several months due to lackluster performance and rumors of them being bought.  Consequently, I had to roll my position down and out to the MAY $55 puts.  These MAY $55 puts expired OTM on 5/17.  My ROIC on this trade in FDO, net of commissions, was 1.38% with a holding period of 57 days.

(4) Franklin-Templeton (BEN) – Like FDO, I have made a couple of trades in BEN these past few months.  Both were profitable.  My latest trade was initiated on 4/7 when I sold the MAY $50 puts at $0.70.  These puts were never in danger of becoming ITM and expired OTM on 5/17.  Net of commissions, my ROIC was 1.32% over a holding period of 40 days.

(5) Lowe’s (LOW) – I initiated my trade in LOW back on 4/7, selling the MAY $46 puts at $0.75.  On 5/6 I had to buy back the MAY $46 puts and ended up selling a higher quantity of JUN $44 for a net credit.  On 5/23 I was able to buy back the JUN $44 puts for $0.19, thus closing out the trade early.  My ROIC, net of commissions, was 1.99% with a holding period of 46 days.

(6) Procter & Gamble (PG) – This was my very first Bollinger Band (BB) strategy trade.  The basic premise of the strategy is to buy stock and/or sell NPs as a stock is bouncing off it’s lower BB.  PG seemed like the perfect set-up and a low risk trade for my first attempt at mastering this strategy.  PG hit and bounced off it’s lower BB on 5/21.  On 5/22 I bought shares of PG at $80.20.  Looking at the chart I believed PG would be able to make it back up to the middle of the BBs (essentially the 20-day MA).  Alas, this was not the case.  The stock’s rise stalled out before even hitting $81.  Not wanting to risk large losses I sold my shares as soon as it became apparent to me that the trade wasn’t going to work out.  On 5/27 I sold my shares in PG at $80.27.  Net of commissions I lost about $10 on the trade.

(7) Exelon (EXC) – Yes, believe it or not I am out of EXC with a profit!  Long time readers of my blog will know that I’ve been working my way out of this position for a very long time.  This trade actually started in APR 2010 by selling puts at the $42.50 strike.  A lot has happened since then.  I’ve collected four years of dividends, sold CCs and NPs numerous time and have had stock put to me and called away at least once each.  Through all of this I was able to reduce my net cost.  Finally last month, prior to EXC going ex-dividend, I sold CCs at the $35 and $36 strikes.  A portion of my shares were called away from me at $35 by someone wanting to capture the dividend.  The $36 CCs expired OTM.  I will be receiving the dividend on these shares.  It should hit my account later this month.  Then, this past week, I sold all of my remaining shares at $36.10.  The final result will be a ROIC of around 12% but the holding period is just over 4 years so the annualized return while beating US Treasuries is nothing to brag about.  What I will brag about though is that I refused to give in and exit the position at a loss.  By selling NPs and CCs when the opportunity presented itself and collecting the dividends over time I was able to successfully exit the trade.

(8) Microsoft (MSFT) – On 5/6 with MSFT at $39.06, I sold the 30MAY $38 puts at $40.  This past Friday those puts expired OTM.  My ROIC was 0.98% with a 24-day holding period.

Now let’s look at the new trades I opened this month.

(1) Back on 5/12 I expanded my long position in $VIX JUL $14 calls.  I bought 2 more calls at $1.95.  Thus far this trade isn’t looking very good.  The market continues to defy gravity by going higher while driving the VIX lower and lower.  The long expected summer slump has yet to occur.

(2) Lastly, I sold more puts on EXC.  I know, I’m stupid.  I can just hear you saying, didn’t you just get yourself out of a long-term losing trade in EXC.  Yes, I did.  However, in this case the market is moving in my direction.  When I originally opened my trade in EXC back in 2010, I thought the stock was bottoming out.  Alas, it continued to fall much further than I thought possible.  This time, I waited until I was sure the market was moving in my favor.  Back on 5/20 I sold the JUN $33 puts at $0.35.  EXC was trading at $34.04.  Friday, it closed at $36.83.  Thus, I should be able to buy to close my puts for pennies on the dollar in the coming week.

Well, that’s it for this month.  As I mentioned at the beginning of this post, I have slowed the pace of my trading substantially.  Put premiums are extremely low right now.  I’m keeping my ‘powder dry’ until things pick back up again.

Best of luck to all my trading friends in the coming month!

Regards,

Troy

April 2014 Results

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

March 2014 Results

Fellow Traders,

Better late than never I always say.  Other responsibilities have kept me from compiling and communicating the results of my trading during the month of March.

In March I closed out 6 trades with a net profit of $1,084.20.  The 6 trades required $72,835 in capital which means my ROIC was 1.488%.  The average holding period was 42 days.

I closed out NP trades in 5 stocks and 1 CC.  The NPs were:

(1) BEN MAR $50 puts expired OTM,

(2) KO MAR $37 puts expired OTM,

(3) WMT MAR $7.50 puts expired OTM,

(4) FDO MAR $60 puts expired OTM, and

(5) PG MAR $75 puts expired OTM.

My CC trade was in AT&T (T).  Back in January I had purchased 500 shares at $34.97 and sold CCs to capture the dividend.  The calls expired OTM and I received the dividend.  I then sold another round of calls and also sold puts at $33 and $32.  I closed the position last week after both my puts and calls expired OTM by selling my stock at $34.86.  All in all, it turned out to be a good trade.

I also have a few trades that rolled over into April.  I rolled my KMI $32.50 puts out from MAR into APR.  I also have pen NP trades in CSCO and TGT.  I am short the APR $21 and $57.50 puts respectively.

My only new trades in MAR that remain open are FDO APR $57.50 puts and my most recent trade which occurred back on 3/27 where I STO NKE APR $72.50 puts at $0.75.

With just over two weeks left before APR expiration I am keeping an eye on a couple possible trades:

(1) STO ABT APR $37 puts at $0.30 or better, and

(2) STO KO APR $37 puts.

 

Well, that’s it for the month of March.  Unless something big happens in the next couple of weeks it looks like I’m not going to have much to write about in April.

Best of luck to all my trading friends.

Regards,

Troy

 

 

 

New Trade – FDO

Fellow Traders,

I STO  2 FDO MAR $60 puts at $0.65 right before the close on Friday.  Reasoning is as follows…

(1) Good ROI, >1% with 2 weeks to expiration.

(2) 5% downside protection

(3) Stock is very oversold, has fallen for 7 straight trading days

(4) support at $60

Likely will close position early on any bounce higher.  With only 2 weeks to expiration the premium should erode rapidly especially with a bounce.

Here’s the 1-yr price chart:

Regards,

Troy

2014 – First Trade

Fellow Traders,

I executed my first trade of the year on the first trading day of the year.  I think that is a first for me.  Yet another first is that the trade was in Clorox (CLX), a stock I had not previously traded.  OK, that’s enough ‘firsts’ for one post.

Here’s the trade I executed: STO 1 FEB CLX $87.50 put at $1.50.

This trade idea came courtesy of my investing friend and mentor Teddi at www.fullyinformed.com.

This trade has the potential to generate a return of 1.63% with a holding period of 51 days.  That equates to an annualized return of 11.66%.  That is just under my target return of 12%.  However, CLX is a lower risk trade so I feel comfortable accepting the slightly lower return.

Here is my trade plan:

If the market sell-off continues for the next couple of days I’m sure more trades will begin to pop up on my radar screen.

Regards,

Troy