Today in a traditional IRA I continued the following transaction:
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
01/20/2012 BTC 2 COP Jan 21 2012 70 Calls @.77 -165.52
01/20/2012 STO 2 COP Jan 27 2012 70 Calls @1.35 +258.45
01/30/2012 STO 2 COP Feb 18 2012 70 Calls @.58 +104.47
Our January calls expired worthless so I wrote new calls. Due to a family emergency it will be hard to trade weekly options so I wrote these 19 days out. This lowers our out
of pocket to $13684.10 or $68.42/share. COP goes ex-dividend on Feb. 17 so if the stock price rises above 70 I may roll the position to make sure I collect the dividend. The dividend will most likely rise this quarter.
Monday, January 30, 2012
Profitable Trade: SLV Naked Puts
The following SLV naked puts expired worthless in a taxable account:
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
In this 8 day trade the puts expired worthless This trade earned a 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
In this 8 day trade the puts expired worthless This trade earned a 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
Tuesday, January 24, 2012
Recent Trade Thoughts
I usually enter into new investments when the market is down and investors are fearful. For the last couple of weeks those times have been rare. I'm a patient person and I've learned to let the market come to me. There are some traders who I respect greatly, i.e., Bill Cara, who are bullish on the markets.
So why did I enter some trades when the market has been bullish? I didn't want to have the train leave the station with me standing on the platform. In any event, I only entered into some conservative out of the money put plays on stocks I would love to own. These were Coca-Cola, Proctor & Gamble and Johnson & Johnson. If put to me the yield on cost would be well above average. In addition, some of these are set to raise their dividends. I also entered into a covered call transaction on Conoco-Phillips. I like this one as they are going to spin off shares and are set to raise the dividend. It also diversifies us into oil and gas.
I've also been trading the precious metals which bottomed a couple of weeks ago. Now that they are back in their bullish trend I'm losing a bit of interest going forward. I'm looking for dips preferably large ones where folks are talking about precious metals cratering.
I think that GOOG may be providing a good opportunity for out of the money put writing, especially 30 or 40 points below where it's trading right now. I probably won't participate, however, as it violates my rule of only trading something I really want to own.
Other than these trades I think it's time to wait for a correction. Obvious opportunities should appear. I've got a ton of cash and margin to work with. With my recent trades I just took a little nibble in case we are off to new highs.
So why did I enter some trades when the market has been bullish? I didn't want to have the train leave the station with me standing on the platform. In any event, I only entered into some conservative out of the money put plays on stocks I would love to own. These were Coca-Cola, Proctor & Gamble and Johnson & Johnson. If put to me the yield on cost would be well above average. In addition, some of these are set to raise their dividends. I also entered into a covered call transaction on Conoco-Phillips. I like this one as they are going to spin off shares and are set to raise the dividend. It also diversifies us into oil and gas.
I've also been trading the precious metals which bottomed a couple of weeks ago. Now that they are back in their bullish trend I'm losing a bit of interest going forward. I'm looking for dips preferably large ones where folks are talking about precious metals cratering.
I think that GOOG may be providing a good opportunity for out of the money put writing, especially 30 or 40 points below where it's trading right now. I probably won't participate, however, as it violates my rule of only trading something I really want to own.
Other than these trades I think it's time to wait for a correction. Obvious opportunities should appear. I've got a ton of cash and margin to work with. With my recent trades I just took a little nibble in case we are off to new highs.
Monday, January 23, 2012
New Trade: Proctor and Gamble (PG) Naked Puts
Today in a taxable account with PG down below 65 due to some analyst downgrades I entered into the following transaction:
01/23/2012 STO 4 PG Mar 17 2012 60 Puts @ .29 153.36
Proctor & Gamble doesn't really need much of an introduction. It is a Dividend Champion, Dividend Aristocrat, blue chip, widow and orphan holding. It will be raising it's dividend next time around. If these get put to us our yield on cost would be over 3.5%, before the dividend increase. PG has shown great support at the 60 level. If the price sinks we have the option of taking the shares, writing covered calls and collecting dividends or rolling the position. We like both of these alternatives. If these puts expire worthless we will earn 3.64% in 54 days on a margin maintenance requirement of $4209.60. This includes commission costs and equates to 24.6% annual.
01/23/2012 STO 4 PG Mar 17 2012 60 Puts @ .29 153.36
Proctor & Gamble doesn't really need much of an introduction. It is a Dividend Champion, Dividend Aristocrat, blue chip, widow and orphan holding. It will be raising it's dividend next time around. If these get put to us our yield on cost would be over 3.5%, before the dividend increase. PG has shown great support at the 60 level. If the price sinks we have the option of taking the shares, writing covered calls and collecting dividends or rolling the position. We like both of these alternatives. If these puts expire worthless we will earn 3.64% in 54 days on a margin maintenance requirement of $4209.60. This includes commission costs and equates to 24.6% annual.
Profitable Trade: Intel (INTC) Covered Calls
In a traditional IRA we were assigned our Intel covered calls. This trade went down as follows:
11/02/2011 Bought 200 INTC @ 23.8875 -4,787.49
11/02/2011 Bought 200 INTC @ 23.8875 -4,787.49
11/02/2011 STO 2 INTC Nov 19 2011 24.0
Call @ 0.42 72.47
11/14/2011 BTC 2 INTC Nov 19 2011 24 Calls @ .89 -189.52
11/14/2011 STO 2 INTC Jan 21 2012 24 Calls @ 1.70 +328.47
12/01/2011 Dividend +42.00
01/21/2012 Sold 200 INTC @ 24 +4779.91
In this trade we made $245.84 in 81 days on an average of ~$4600 invested. This equates to a return of 5.3% or 23.88% annual. As always we include our commissions paid in the calculations. We allowed ourselves to get assigned because we didn't see any attractive opportunities to roll for a credit. I only roll options for a credit, no exceptions. We really like INTC and will probably write out of the money covered puts in this account to buy it back at a price of our choosing. Of course we will be paid for our efforts.
11/14/2011 BTC 2 INTC Nov 19 2011 24 Calls @ .89 -189.52
11/14/2011 STO 2 INTC Jan 21 2012 24 Calls @ 1.70 +328.47
12/01/2011 Dividend +42.00
01/21/2012 Sold 200 INTC @ 24 +4779.91
In this trade we made $245.84 in 81 days on an average of ~$4600 invested. This equates to a return of 5.3% or 23.88% annual. As always we include our commissions paid in the calculations. We allowed ourselves to get assigned because we didn't see any attractive opportunities to roll for a credit. I only roll options for a credit, no exceptions. We really like INTC and will probably write out of the money covered puts in this account to buy it back at a price of our choosing. Of course we will be paid for our efforts.
Profitable Trade: Microsoft (MSFT) Covered Calls
In a traditional IRA we got assigned our MSFT calls. The entire transaction was as follows:
11/01/2011 13:29:58 Bought 200 MSFT @ 26.029 -5,215.79
11/01/2011 13:31:11 Sold 2 MSFT Nov 4 2011 26.0
Call @ 0.36 60.47
11/04/2011 14:52:03 Bought 2 MSFT Nov 04 2011
26.0 Call @ 0.25 -61.52
11/04/2011 14:52:44 Sold 2 MSFT Dec 17 2011 26.0
Call @ 0.88 164.45
12/08/2011 Dividend 40.00
12/16/2011 BTC 2 MSFT Dec 17 2011 26 Calls @ .05 -10.03
12/16/2011 STO 2 MSFT Jan 21 2011 26 Calls @.67 112.47
01/21/2012 Sold 200 MSFT @ 26 5179.91
We made $280.38 in 82 days on an average of ~$5000 invested. This equates to a return of 5.6% or 24.92% annual. We were fairly deep in the money so no rolls made any sense. After doing this for many years I have a rule that I only roll for a credit. I really like Microsoft and will probably write covered puts in this account for income and to possibly buy the stock at a price I want to pay.
01/21/2012 Sold 200 MSFT @ 26 5179.91
We made $280.38 in 82 days on an average of ~$5000 invested. This equates to a return of 5.6% or 24.92% annual. We were fairly deep in the money so no rolls made any sense. After doing this for many years I have a rule that I only roll for a credit. I really like Microsoft and will probably write covered puts in this account for income and to possibly buy the stock at a price I want to pay.
Sunday, January 22, 2012
Profitable Trade: SLV Covered Call
Today we were assigned out of our position in SLV in a Roth IRA. The trade was as follows:
12/19/2011 Bought 100 SLV @ 28.389 -2848.85
12/19/2011 STO 1 SLV Jan 21 2012 29 Call@1.12 +101.27
01/21/2011 Sold 100 SLV @ 29 2879.94
We made $132.94 in 33 days. This equates to a 4.84% return or 53.5% annual. There weren't any juicy near month options to roll so we let it get assigned. I'll be hoping to find an opportunity to get this cash back in play soon.
12/19/2011 Bought 100 SLV @ 28.389 -2848.85
12/19/2011 STO 1 SLV Jan 21 2012 29 Call@1.12 +101.27
01/21/2011 Sold 100 SLV @ 29 2879.94
We made $132.94 in 33 days. This equates to a 4.84% return or 53.5% annual. There weren't any juicy near month options to roll so we let it get assigned. I'll be hoping to find an opportunity to get this cash back in play soon.
Saturday, January 21, 2012
Profitable Trade: GDX Naked Puts
Yesterday I closed out for a profit in a taxable account the following transaction:
12/12/2011 STO 2 GDX Jan 21 2012 52 Puts @ 1.47 +282.45
01/20/2012 BTC 2 GDX Jan 21 2012 52 Puts @ .03 -6.03
We made $276.42 on this investment in 39 days. The average margin maintenance was ~ 4400.00. This equates to a return on margin of 6.3% or 59% annual. As I've stated I thought precious metals bottomed a couple of weeks ago. The massive run up of the dollar is consolidating and toppy. I'm probably going to be trading GDX and GDXJ (junior precious metal miners) more than GLD and SLV as the latter ETF's are paper rather than physical metal. We've seen with MF Global that paper can vanish into thin air. Many investors have lost faith in the COMEX and some in the know believe that at some point GLD and SLV will default on their obligations. We've seen with credit default swaps, fractional banking and the like that paper assets can vanish in a corrupt dark cloud.
12/12/2011 STO 2 GDX Jan 21 2012 52 Puts @ 1.47 +282.45
01/20/2012 BTC 2 GDX Jan 21 2012 52 Puts @ .03 -6.03
We made $276.42 on this investment in 39 days. The average margin maintenance was ~ 4400.00. This equates to a return on margin of 6.3% or 59% annual. As I've stated I thought precious metals bottomed a couple of weeks ago. The massive run up of the dollar is consolidating and toppy. I'm probably going to be trading GDX and GDXJ (junior precious metal miners) more than GLD and SLV as the latter ETF's are paper rather than physical metal. We've seen with MF Global that paper can vanish into thin air. Many investors have lost faith in the COMEX and some in the know believe that at some point GLD and SLV will default on their obligations. We've seen with credit default swaps, fractional banking and the like that paper assets can vanish in a corrupt dark cloud.
Friday, January 20, 2012
New Trade: GDX Naked Puts
Today with GDX trading at ~52.50 I entered into the following transaction in a taxable account:
01/20/2012 STO 4 GDX Feb 18 2012 GDX 49 Puts @.57 214.89
If these puts expire worthless we will earn 6.7% in 29 days on a margin maintenance requirement of $3195.88. This equates to 84.3% annual. I was looking at the 48's for .44 but decided to take on a little more risk since this ETF is easy to roll down and out.
01/20/2012 STO 4 GDX Feb 18 2012 GDX 49 Puts @.57 214.89
If these puts expire worthless we will earn 6.7% in 29 days on a margin maintenance requirement of $3195.88. This equates to 84.3% annual. I was looking at the 48's for .44 but decided to take on a little more risk since this ETF is easy to roll down and out.
Trade Continuation: Conoco Phillips (COP) Covered Calls
Today in a taxable account I continued the following transaction:
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
01/20/2012 BTC 2 COP Jan 21 2012 70 Calls @.77 -165.52
01/20/2012 STO 2 COP Jan 27 2012 70 Calls @1.35 +258.45
We rolled the covered call for a net credit of $92.93. This lowers our out of pocket to $13788.57 or $68.94/share. If we get called away we will make $190.43 in 2 weeks. This equates to a return of 1.4% or 35.9% annual. Before we get exercised we will look to roll the options again with an eye on the weeklys.
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
01/20/2012 BTC 2 COP Jan 21 2012 70 Calls @.77 -165.52
01/20/2012 STO 2 COP Jan 27 2012 70 Calls @1.35 +258.45
We rolled the covered call for a net credit of $92.93. This lowers our out of pocket to $13788.57 or $68.94/share. If we get called away we will make $190.43 in 2 weeks. This equates to a return of 1.4% or 35.9% annual. Before we get exercised we will look to roll the options again with an eye on the weeklys.
Thursday, January 19, 2012
New Trade: Johnson and Johnson (JNJ) Naked Puts
Today in a taxable account with JNJ trading at just under 65 I entered into the following transaction:
01/19/2012 STO 4 JNJ Apr 21 2012 60 Puts @.77 294.89
JNJ is obviously a long term hold. It is a dividend aristocrat, dividend champion, blue chip, widow and orphan core holding. If put to us our yield on cost will be over 3.8% with a dividend increase expected shortly after. We could then write covered calls on the position. If the puts expire worthless we will earn 8.73% in 93 days on margin maintenance of $3377.60 which equates to 34.26% annual. Of course we could choose to roll the position, we'll just have to see how things shake out.
01/19/2012 STO 4 JNJ Apr 21 2012 60 Puts @.77 294.89
JNJ is obviously a long term hold. It is a dividend aristocrat, dividend champion, blue chip, widow and orphan core holding. If put to us our yield on cost will be over 3.8% with a dividend increase expected shortly after. We could then write covered calls on the position. If the puts expire worthless we will earn 8.73% in 93 days on margin maintenance of $3377.60 which equates to 34.26% annual. Of course we could choose to roll the position, we'll just have to see how things shake out.
New Trade: SLV Naked Puts
Today in a taxable account with SLV trading at 29.65 I entered into the following transaction:
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
The new weekly options on this came out today. I was so busy with other things that I missed out on last week's trade. The dollar seems to be weakening again and the precious metals bottomed a couple of weeks ago. If the trade goes against me I'll either close or roll out and down. If these puts expire worthless it is 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
01/19/2012 STO 6 SLV Jan 27 2012 28 Puts @.15 75.46
The new weekly options on this came out today. I was so busy with other things that I missed out on last week's trade. The dollar seems to be weakening again and the precious metals bottomed a couple of weeks ago. If the trade goes against me I'll either close or roll out and down. If these puts expire worthless it is 2.94% return on margin maintenance of $2568.00 which equates to 134.1% annual.
Friday, January 13, 2012
New Trade: Conoco-Phillips (COP) Covered Call
Today in a traditional IRA I entered into the following transaction:
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
Our out of pocket on this transaction is $13881.50 or $69.41/share. There are only 4 market days until options expiry. If this is called away it will provide a return of $100 in 7 days or .007% which equates to 36.4% annual. This is an issue we like long term and there is a good chance we'll roll this position. There will be a spin-off company later in the year as well as a dividend raise in the next quarter.
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
Our out of pocket on this transaction is $13881.50 or $69.41/share. There are only 4 market days until options expiry. If this is called away it will provide a return of $100 in 7 days or .007% which equates to 36.4% annual. This is an issue we like long term and there is a good chance we'll roll this position. There will be a spin-off company later in the year as well as a dividend raise in the next quarter.
Thursday, January 12, 2012
Profitable Trade: GDX Naked Puts
Today I closed and took profits in the following transaction in a taxable account:
12/30/2011 STO 3 GDX Jan 21 2012 48 Puts @.5 137.71
01/12/2011 BTC 3 GDX Jan 21 2012 48 Puts @.02 -6.04
We made $131.67 in 12 days on a margin maintenance requirement of ~ $2300. This equates to a return on margin of 5.7% or 173.3% annual. This account is now all cash and we're waiting for the next opportunity. The market is feeling toppy but as we've learned we will let the prices come to us and not chase trades just for the sake of trading.
12/30/2011 STO 3 GDX Jan 21 2012 48 Puts @.5 137.71
01/12/2011 BTC 3 GDX Jan 21 2012 48 Puts @.02 -6.04
We made $131.67 in 12 days on a margin maintenance requirement of ~ $2300. This equates to a return on margin of 5.7% or 173.3% annual. This account is now all cash and we're waiting for the next opportunity. The market is feeling toppy but as we've learned we will let the prices come to us and not chase trades just for the sake of trading.
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