The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘T’

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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October / November Results

Posted by mounddweller on November 30, 2014

Fellow Traders,

Ok, I know I didn’t provide an update last month.  Quite honestly I had very little to write about.  My trading in October was negligible.  I closed two trades one winner and another a loser.

My losing trade was in Analog Devices (ADI).  On September 17th I sold to open OCT $49 puts for $0.75.  At the time ADI was trading at $49.71.  I sold the puts as the stock bounced off the lower Bollinger Band.  My intent was to buy back the puts once the stock ran into resistance or hit the upper Bollinger Band.  As you can see, after about three days the stock began to trade sideways.  Had a stuck to my plan and exited I would have closed out the trade with a small gain.  Instead I chose to hang on and hope that ADI would resume its climb to the upper Bollinger Band.  Failure to follow my plan cost me dearly.  I held on until OCT expiration but not wanting to have ADI put to me and not wanting to roll out to NOV I chose to buy to close my puts and accept the lost.  As you can see I bought back my puts at almost the worst possible time.  Shortly after expiration the stock began to rise.  Had I simply rolled out at the $49 strike or down and out to a lower strike I could have managed the trade back to a profitable close.  Alas, hindsight is 20/20.

BLOG - ADI

My revised plan is to resell another round of puts once ADI returns to a favorable trading position.  Thus far that has not occurred and I am sitting on my loss.

My winning trade in October was in T. R. Price (TROW).  TROW is on my list of stocks that I’d like to accumulate for my retirement portfolio.  On October 15th I sold to open the NOV $70 puts at $1.85.  Like with ADI, TROW was at the bottom of the Bollinger Band and I sold the puts in anticipation of a bounce.  However in this case, unlike ADI the trade worked in my favor.  I was able to buy to close my puts just one week later on October 23rd at $0.30.

BLOG - TROW

Now let’s move on to November.  This past month I successfully closed two trades, one in AT&T (T) and the other in TJ Maxx (TJX).

On October 23rd I sold to open the NOV $33 puts for T at $0.36.  At the time T was trading at $33.49.

BLOG - T nov14

At November expiration T was trading at $35.28 and the puts expired OTM.

My last closed trade was in TJX.  On November 19th I sold to open the TJX DEC $57.50 puts at $0.65.  At the time TJX was trading at $61.35.

BLOG - TJX

A scant 6 days later TJX was at $64.24 and I was able to buy to close my puts for only $0.05.

That’s it for my closed trades.  My trade in VALE remains open and I am actively working to manage my position by selling covered calls and buying them back when the opportunity presents itself.

My newest open trade is in Occidental Petroleum (OXY).  I used the energy meltdown on Friday to sell the DEC $75 puts at $0.77.  At the time OXY was trading at $79.82.

Well that’s it for another month.  I’ll be back at the end of December with both a monthly and yearly update.

Happy trading.

Regards,

Troy

 

 

 

 

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March 2014 Results

Posted by mounddweller on April 3, 2014

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

 

 

 

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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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New Trades – T and WM

Posted by mounddweller on November 24, 2011

Fellow Traders,

Yesterday I opened two new NP trades.

(1) STO 3 T DEC $27 Puts at $0.40

(2) STO 4 WM DEC $28 Puts at $0.40

First, let’s look at my trade in AT&T (T).  I’ve traded in and out of T on a couple of different occasions.  I find it attractive at $27 or less.  I sold my puts when T was trading at $27.63.  With this trade I don’t have much down-side protection but in this case that wasn’t important to me.  If I have T put to me at $27 at December expiration I will be in line to receive the $0.43 dividend; T goes ex-dividend on January 6th.  My ROIC is 1.36% (net of commissions) with 23 days to expiration.

I limited the size of my trade to 3 contracts.  If T continues to move lower I will sell additional puts at the $25 and/or $24 strike price.  T has a solid and steadily increasing dividend.  I think it will find support as its yield closes in on 7%.

Next up is Waste Management (WM).  Regular readers may recall that I sold naked puts on WM last month as well.  The puts at the $28 strike price expired worthless.  Thus, with the market selling off again on Wednesday, I took the opportunity to sell the DEC $28 puts for $0.40.  My ROIC, net of commissions, in this trade is 1.34% with 23 days left to expiration.

Looking at the chart above it should be obvious why I like the trade at the $28 strike price.  WM has solid support at $28.  You’ll notice both the T and WM charts are 3-yr charts.  One thing I’m looking at all of my trades these days is where did the stock trade in October 2008 and March 2009.  This gives me some sense of how much down-side risk I might have if either the European or American debt crisis causes the markets to come unglued.

Both my T and WM trades represent my efforts to focus more of my trades in blue-chip, large-cap, dividend achiever types of stocks.   These are stocks that I can feel comfortable owning and establishing long-term positions in.    Once assigned I can collect dividends over time and sell calls against these positions.

Regards,

Troy

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SEP Closed Positions

Posted by mounddweller on September 18, 2011

Fellow Traders,

I finally was able to catch up and update the Historical Results and Open Positions pages of my blog.  I encourage you to take a look.  Also, I wanted to take a moment to post the trades I closed between the AUG and SEP expiration.

As you can see I closed 7 trades this month.  All were cash secured naked put trades.  Premiums received (net of commissions) totalled $1,040.82.  My maximum amount of capital at risk during the month was $73,500.  This equates to a ROIC of 1.42%.

I’m hopeful I will be able to take advantage of similar opportunities as they present themselves between now and OCT expiration in 5 weeks.

Regards,

Troy

 

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Two New NP Trades

Posted by mounddweller on September 1, 2011

Fellow Traders,

I want to update you on two trades I made earlier this week.  Yesterday, I took advantage of the US Justice Department’s decision to attempt to block AT&T proposed merger with T-Mobile.  AT&T (T) sold off hard on the news falling from $29.90 to as low as $28.00 (6.4%).  Believing the market had over-reacted I executed the following trade:

STO 5 T SEP $27 puts at $0.37

This gives me a 1.29% ROIC (net of commissions) with 17 days to expiration (DTE).  Annualized my ROIC is 27.68%

Today, I placed a trade in Annaly (NLY).  I’ve never traded NLY before.  My objective in this trade is very different from almost all of my other naked put trades.  In this case I want to have NLY put to me at $17.   You see NLY goes ex-dividend towards the end of this month (after SEP expiration).  If I have the stock put to me at $17 I will be eligible to receive the $0.65 quarterly dividend.   Here’s the trade I executed:

STO 5 NLY SEP $17 puts at $0.30

Excluding the potential for collecting a dividend this trade gives me a 1.64% ROIC (net of commissions) with 16 days to expiration (DTE).  Annualized my ROIC is 37.32%.

My return gets even better if NLY closes below $17 and I have the stock put to me.  In this case I will hold the stock at least until the ex-dividend date of 9/29.  Doing so will give me a cost basis of $16.05.  At that point I can either sell the stock immediately or sell OCT or NOV calls against my position.  My ROIC including the dividend is a juicy 5.6% with a minimum holding period of 29 days.

Well, that’s it for this evening.  Best of luck to everyone in this new month of September.  I have a feeling it is going to be a wild month.

Regards,

Troy

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MAR Wrap-up and New APR Trades

Posted by mounddweller on March 20, 2011

Fellow Traders,

Like many of you I’ve spent a good portion of this weekend reviewing how I did in March and looking for potential April trades.  Here’s a brief recap of my March activity.  First, my closed trades:

(1) Back on February 4th I sold 4 MRK MAR $31 puts at $0.35.  After commissions I netted $128.03.  These puts expired OTM.

(2) On February 28th I sold 3 RVBD MAR $35 puts at $0.45.  After commissions I netted $123.77.  This was one of my Deep OTM NP Strategy selections.  The puts expired OTM.

Now, onto my trades which remained open.

(1) First Exelon (EXC).  I started this trade almost one year ago, back on April 16th.  My most recent activity includes selling 2 APR $43 calls at $0.90 and then buying them back late last week at $0.30.  Also, earlier this month I sold 3 APR $40 puts at $0.50.  Between selling calls and puts, and the dividends received I have reduced my cost basis from $42.50 to $37.46.

(2) Next up is Hugoton Royalty Trust (HGT).  This is my third trade in HGT.  The first two were very successful.  I initiated this third trade back on March 1st, buying 500 shares of HGT at $21.50.  On March 17th I sold 5 AUG $22.50 calls at $0.80.    The strategy with HGT is to buy the shares, sell calls 4-6 month out, and then collect monthly dividends.

(3) CSCO is my next open position.  Back on February 10th I opened this trade by selling 5 MAR $18 puts at $0.21.  On Friday I rolled these puts out to JUN for a $0.70 net credit.

(4) NOK is up next.  I did a buy/write on them back on March 11th at a net debit of $8.17.  I sold the APR $9 calls. 

(5) My remaining open position is in Getty (GTY).  On March 14th I sold 5 MAR $22.50 puts at $0.55.  These puts expired ITM and thus I will have 500 shares of GTY put to me at $22.50 on Monday morning.  My plan is to sell the JUN $25 calls at $0.75 and collect the $0.48 dividend which will be paid in mid-April.

Now onto my my list of potential trades for April.

Let’s briefly look at each of these.

(1) First up is Gamestop (GME).  You’ll notice I have them listed twice.  That’s because I can’t decide which trade I like better.  I like the ROIC with the $19 put and I have traded GME at this strike price with good results before.  However, I like the $18 strike because there is better support at this price.

 (2) Next is CSCO.  As I mentioned above I am already short 5 contracts at the $18 strike.  This trade expands my position by selling more puts at a much lower strike.

(3) Aflac (AFL) is my next pick.  It has fallen sharply because of the tremendous disaster in Japan where it does a lot of business.  It closed at $50.47 on Friday well off its 52-wk high of $59.54.

(4) JNJ is up next.  I ‘borrowed’ this pick from by investing buddy Teddi over at www.fullyinformed.com.  JNJ is approaching bargain territory so this is a good trade despite the sparcity of DSP.

(5) AT&T (T) is fast approaching their ex-dividend date and is trading at a nice price.  Thus, I’m happy to enter a buy/write trade here and reinitiate a position in T.

(6) Last up is GTY which I discussed up above.  As I said before I intend to sell CCs against the shares I’m acquiring tomorrow.  With a dividend yield in excess of 8% I won’t mind holding this one for awhile.

Best of luck to all my readers out there.  Let me know your thoughts on my trades and I would enjoy hearing what trades you’re considering.

Regards,

Troy

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FEB Expiration – Results

Posted by mounddweller on February 21, 2011

Fellow Traders,

Just a quick post to update everyone on my trades that closed at expiration on Friday.  I had a number of NP trades  that closed OTM.  They are as follows:

As you can see one mistake can do a heck of a lot of damage to what otherwise was a good month.  So, lesson learned.  STICK TO YOUR GAMEPLAN!

Regards,

Troy

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New NP Trades – T and GME

Posted by mounddweller on January 11, 2011

Investing Buddies,

I placed two new NP trades yesterday.  Let me tell you a little bit about them.  First off let me make it clear that neither of these trades are the result of new selections from my Deep OTM NP Strategy.  No, rather these trades come from two entirely different NP trading strategies.  In my mind that is the absolute beauty of trading naked puts.   Naked puts can form the basis for many types of trading strategies with differing objectives and risk profiles.

The first trade I would like to tell you about involves AT&T (T).  You’ll recall last week I had an early assignment of my JAN $29 calls due to another investor who wanted to capture the upcoming T dividend of $0.43.   Having been called away at $29 I immediately began to formulate a plan to rebuild a new position in T over time.  I accomplished the first phase of this plan by selling 2 FEB $28 puts at $0.58.  Now, with hind-sight being 20/20, it’s clear that I reentered the position a little early.  T fell again today and closed at $27.91.  However, since my goal is to establish a long-term position in T I’m not really concerned if I catch the very bottom in prices.  T is very cheap at this price, currently trading for 7.5x earnings and yielding 6%.  The next phase of my plan will be to sell another 4-6 NP contracts at lower strike prices, further out on the calendar.  My ultimate objective is to own 600-800 shares of T with a net yield of > 7.5%.

So let’s recap how I’m using NPs in this strategy to achieve my goals. I’m using naked puts to accomplish three things (1) generate immediate income (cash flow) in my account, (2) lower my eventual cost basis in AT&T when I accept assignment and have the stock put to me, and (3) and accumulate a long-term postion in AT&T.

This first trade generated $105.55 in cash flow, lowered my potential cost basis to $27.47, and if T closes less than $28 at expiration in February and I choose to accept assignment I will have acquired 200 of my total desired 800 share position.  My ROIC is 1.88% with 40 days to expiration.

Now let’s talk about Gamestop (GME).  My strategy and objective with GME is different from that of AT&T and different from the strategy and objectives of my Deep OTM NP Strategy.  My trade in GME is an opportunistic one.  I wanted to execute a trade in GME because the market offered me an attractive entry point and a favorable risk/reward ratio.   While I don’t necessarily want to own GME as a long-term core holding, I am not averse to holding it in my account for some period of time. 

I have traded covered calls and naked puts on GME several times in the past.  It is a stock I am comfortable owning when it approaches its book value which is currently $18.30.  For this particular trade I noticed that GME had fallen sharply from a recent high of just over $23 to down around $20.  In looking at the chart I also noticed that it had very strong support between $18 and $19.   So I decided to sell 5 FEB $19 puts at $0.38.

Again, my objective with this trade is to just take advantage of the recent sell-off in price and use it to generate income (cash flow) in my account.  This trade generated $177.30 (net of commissions) which equates to a 1.87% ROIC with 40 days to expiration.  If I choose to have the stock put to me at $19 I will own it at a net cost of $18.62, a mere $0.32 above its current book value. 

Regards,

Troy

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