The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘YUM’

November 2013 Results

Posted by mounddweller on December 8, 2013

Fellow Traders,

Yes, I have been very negligent in updating my blog.  My results of late have not been anything to write home about and so I cut way back on my trading activity and am conversing regularly with my good friend Teddi over at www.fullyinformed.com to see how I might improve my results.

However, that being said I do want to take a moment to document the few trades I did close last month.  In November I closed 4 trades in 3 stocks, CSCO, TEVA, and YUM.

(1) CSCO – 11/13 BTC 3 NOV $22 puts at $0.09.  Netted a whopping $91.10 for a 1.38% ROIC with a 28 day holding period.

(2) TEVA – 11/13 BTC 3 NOV $37.50 puts at $0.03.  Netted $124.10 for a 1.10% ROIC with a 14 day holding period.

(3) YUM – closed NOV puts at the $62.50 and $65 strikes.  Net result was a small loss of $2.25.

My only recent new trade was a put ladder in CSCO.  I am now holding JAN, APR, and JUL puts at the $20, 19, and 18 strikes respectively.  The objective of this trade is to eventually own CSCO at a net cost per share of < $20.  I like CSCO’s long-term growth prospects and recent commitment to supporting a growing dividend.

Finally, before signing off I’ll tell you I’m thinking of revamping my site to include updates on my long-term holdings.  More on that later.

Regards,

Troy

 

 

 

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Monthly Results – FEB 2013

Posted by mounddweller on February 28, 2013

Fellow Traders,

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

Number of Closed Positions: 2

Profit on Closed Trades: $(1,338.45) – Yes, I lost money this month.  More on that later…

Total Capital Used on Closed Trades: $39,267.90

Average Number of Days Trades Were Open: 530 – No, that’s not a misprint.  Again, more on that later…

Return on Invested Captial: None, I had a realized loss of capital.

OK, before I move on to the stats for my open trades, let me tell you a little more about these closed trades and the peculiar results.  Actually, I had one losing trade and one winning trade.  The losing trade was a long-held position in EXC that was unexpectedly called away from me.  I had ITM calls that got assigned early so someone could capture EXC’s last $0.525 dividend.  I had held EXC in my account for almost 3 years.  My sale of naked puts and covered calls and the collection of quarterly dividends could not make up for the steady decline in price.  Thus, I lost about $1,500 out of the $20,500 of capital I had in this trade.  I am working to recapture that lost capital by selling a new round of naked puts.  As a result my net loss on EXC is now down to $1,200.

My other closed trade was a winner.  My 3 naked puts in YUM at the $62.50 strike expired OTM.  This resulted in a gain of $214 on $18,750 in capital in 25 days.

Now let’s look at my open trades.

Number of Open Positions: 7

Net Cash Flow in February from Open Positions: $1,288.85

Total Capital Used on Open Trades: $90,340

Net Cash Flow on Invested Capital: 1.43%

This month I am again pleased with the net cash flow on invested capital.  However, I am disappointed in the realized loss of capital from my closed trade in EXC.  I am working hard to learn to avoid sizable losses of capital.

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

Regards,

Troy

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Update – FEB Expiration

Posted by mounddweller on February 18, 2013

Fellow Traders,

Just a short post tonight to update you on my trading activity this past week leading up to FEB expiration.

GDX – I thoroughly messed this trade up.  As you may recall I was short both the FEB $44 and $41 puts.  Earlier in the week GDX was trading above $42 and I could have bought back my $44 puts at a small profit.  The $41 puts could have been bought back for pennies.  However, with only a few days to expiration I decided to let both of them ride.  BIG MISTAKE!  Gold fell through support and the Gold Miners Index fell right along with it.  GDX closed Friday $39.89.  Thus, not wanting to accept assignment, I had to move quickly to roll my puts out.  Here’s what I decided to do:

(1) I rolled my FEB $44 puts out to the SEP $41.50 strike for a net credit of $0.05.  The small net credit essentially covered my commissions.  I did this because I expect we’ll get a bounce soon and by now having puts at the $41.50 strike I should be able to extract myself from this trade for a small profit.

(2) I rolled my FEB $41 puts out to the 22FEB $41 strike for a net credit of $0.22.  I thought $0.22 for one week was a fair trade.  If GDX doesn’t bounce by Friday I’ll roll out again and likely down to the $40 strike.

COH – Very strange transaction occurred with Coach.  Recall I was long 100 shares of COH and had sold a FEB $52.50 call.  In addition, I had sold 2 FEB $50 puts.  On Friday (the day BEFORE expiration) I had 200 shares of COH put to me at $50.  The owner of my puts put the stock to me!  Why I have no clue.  He/she could just as easily have sold to close and made a sizeable profit.  Oh well, it didn’t matter to me because I wanted to acquire the additional 200 shares anyway.  Now, I own 300 shares at a net cost of $49.94 share.  Tomorrow, I will sell OTM covered calls against my 300 shares and thereby set myself up to receive the $0.28 dividend in early March.

EXC – I had another embarassing gaff with Exelon.   Long-time readers will remember I have been holding EXC shares and trading puts and calls against them for three years.  My most recent trades had been to write covered calls at the $30 strike in anticipation of the stock going down after the dividend cut was finally announced.  Well, much to my chagrin EXC initially increased after the dividend cut announcement.  My calls were now deep in the money.  Long story short, someone called away my stock earlier this week so they could capture the hefty $0.525 dividend.  I waited too long to roll my calls.

Since I want to own EXC long-term I immediately sold another round of APR puts at the $30 strike for $0.60.

YUM – Last, but not least, I need to update you on my YUM trade.  The lesson to be learned in this trade is not to panic and to be patient.  Many of you know YUM is facing a strong headwind in their largest market, China.  The rumors of tainted chicken have caused sales to fall significantly.  The stock responded accordingly by falling to $60 earlier this month.  At that time my puts were $2.50 in the money and YUM looked like it could fall further.  Rather than panic, I heeded the sage advice of my friend Teddi over at www.fullyinformed.com.  By staying the course I was able to watch YUM recover, closing Friday at $63.99.

This trade resulted in a ROIC of 1.14% in 25 days or 16.7% annualized.

Best of luck to everyone trading this week.

Regards,

Troy

 

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