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May 20, 2016

Options Expiration – May 2016

Filed under: Account Summary,Finance,Stock Picks - 20 May 2016

I only had two options expire today – 10 TLT May $125 covered puts and three TLT May $134 naked calls. Both legs were set to expire worthless and I planned to sell new puts and calls for July, but margin limitations didn’t agree with my plans. Since both legs were far enough out of the money, I considered them nearly impossible to be assigned after mid-day and decided to let them expire worthless. While TLT was trading at $130.13, I sold eight TLT July $127 covered puts for $1.45 each and received $1,156.67 after paying $3.33 in commission.

I tried to sell 10 puts, not just eight, but margin limitations wouldn’t let it go through. I saw that by reducing my order to eight, it would go through. However, after the order triggered, I had a margin warning (so frustrating). That made me go back in to buy back some of my May puts to appease the system. While TLT was trading at $130.10, I bought to close five TLT May $125 covered puts for $0.01 and paid $5.00 total since IB doesn’t charge commission to close options for a penny on the final day of trading.

I debated if I should …

May 2, 2016

End of the Month Summary – April 2016

Filed under: Account Summary,Finance,Indices - 02 May 2016

My account continued to regain value in April even after March’s amazing month of gains.  My account value peaked a few thousand dollars higher than I finished, but still am happy to have another solid month in the books.  I expect May to help me again, but it will really depend on how bonds move throughout the month.

I ended April with a Net Liquidation Value (NLV) of $87,801.47 and a Net Asset Value (NAV) of $87,562.17 according to Interactive Brokers (IB) after finishing March with an NLV of $84,650.40.  That gave me a gain of $3,151.07 (~3.72%) on paper for April and a realized loss for the month of $2,317.26 on only two closing trades.  I received $81.62 dividends in April from my MDY shares and deducted it from my realized losses.  I also paid $397.86 in short interest, debit interest, and dividends for my TLT short shares.  Quicken reported that I have an account value of $87,591.63, the same as IB’s reported NAV after accounting for interest accruals of -$29.46.

While TLT’s influence still dominates my account (which was a good thing again in April), my long positions on DIS, IWM, and MDY all gained ground in April.  I keep saying that I’m going to write covered calls on these long shares, …

April 28, 2016

Closed TLT May Call Ratio Spread

Filed under: Finance,Stock Picks - 28 Apr 2016

Taking a loss is never fun, but I should’ve done it sooner maybe.  My ratio call spread on TLT set to expire in May didn’t quite go as planned.  While TLT was trading at $128.43 this afternoon, I bought to close 10 TLT May $126 calls for $2.85 each and sold to close 20 TLT May $133 calls for $0.25 each.  I paid $2,372.38 including $22.38 in commission to dump all 30 contracts.

I brought in $54.52 in February and ended with a realized loss of $2,317.86.  That loss comes even with TLT falling $3.19 between my opening and closing trades.  My plan was for TLT to fall below $126 by expiration.  I could’ve made a decent profit if I hadn’t used such a low strike to sell, but I had no idea TLT would stay elevated this long.

While the ETF could still fall another $2.43 in three weeks, I didn’t want to have to pay the dividend after tomorrow and have an early assignment that would force my hand anyway due to a margin call (again).  The time value on the short shares was roughly equal to the expected dividend payment, so I would’ve been banking on further weakness in TLT more …

April 15, 2016

Options Expiration – April 2016

Filed under: Account Summary,Finance - 15 Apr 2016

Once again, I have no options expiring today.  I haven’t even made a trade in weeks.  So, I’ll give a portfolio update instead.  I was planning to sell covered calls on my IWM, MDY, DIS shares, but the charts showed a lot of upside available and I waited.  Now, I’m thinking about it again and will probably get to it next week.  I might buy a put spread to help hedge my IWM position too.

TLT is still my biggest account influence.  My balance fluctuates daily in large part due to the price of TLT.  The big debate I’m having now is if I should sell my hedges and cut the losses I expect to have from the time value erosion between now and May expiration and then to the June expiration too.  Days like today, when TLT rallies and I save $1,650 on paper, make me want to stay long with these hedges.  My other option (no pun intended) is to sell new calls above my hedges.  I’d have some risk added, but would still have my hedges in place if TLT only pushes a little higher.  I also might sell more puts.  My TLT May $125 puts have gained …

April 4, 2016

End of the Month Summary – March 2016

Filed under: Account Summary,Finance,Indices - 04 Apr 2016

March was a fantastic month for nearly everyone who was long stocks.  My gains were cut by my short position on TLT, the 20-year Treasury ETF, but I still had a really good month.  My stock ETFs produced all of my gains.  My TLT shares that I’m short cost me $3,884, but my options on TLT cut that loss by $3,578 to give me a net loss on TLT of $306.  TLT actually fell a few cents in March, but I was forced to buy 600 shares for a loss to start the month.

I ended March with a Net Liquidation Value (NLV) of $84,650.40 and a Net Asset Value (NAV) of $84,341.63 (not counting $8.16 in interest accruals not yet paid) according to Interactive Brokers (IB) after finishing February with an NLV of $80,095.43.  That gave me a gain of $4,554.97 (~5.69%) on paper for March and a realized loss for the month of $3,198.06 on six closing trades.  I received $97.99 dividends in March and deducted it from my realized losses.  Quicken reported that I have an account value of $84,305.32, the same as IB’s reported NAV after accounting for dividend and interest accruals of -$81.62 and +$45.31 respectfully.

My account is still very biased towards my TLT short position.  I only …

April 3, 2016

SPY Chart – April 1, 2016

Filed under: Finance,Indices,Stock Charts - 03 Apr 2016

The chart below shows the monthly prices for the past year on SPY, an S&P 500 Index ETF, after closing the week at $206.92, on April 1, 2016.

Technical indicators can be cruel sometimes.  As with every stock and index prediction tool, sometimes they give false positives.  If they didn’t, everyone would use them and nobody would fall prey to a bear market.  The occurrence of these false positives is the primary reason technical investors need to use more than one indicator.  Three of my favorite technical indicators to use together are trend lines, moving averages, and Williams %R.

The Williams %R indicator, sometimes simply called %R, was early in its forecast for doom before the August 2015 correction.  The steep decline hit stocks the following month before % R had a chance to reset for another red flag.  The same indicator accurately predicted the return to the downside in December 2015, but gave a false positive for a lasting rebound in January 2016.  The beauty of %R is that when it does give a false positive, the next signal tends to be very …

March 21, 2016

More TLT Adjustments

Filed under: Finance,Stock Picks - 21 Mar 2016

Last month, my margin balance forced me to buy back 600 of my short TLT shares for a loss and then IB wouldn’t let me sell puts to cover my remaining shorts.  TLT has fallen more since then, so I decided to test the waters again now that those trades have long since settled.  I started with a small trade to see how it would affect my margin balance.  While TLT was trading at $128.46, I sold three TLT May $125 puts for $1.42 and received $424.75 in premiums after paying $1.25 in commission.  As expected, my current maintenance margin only rose slightly and I was fine.  The number that matters, what IB calls the Special Memorandum Account, actually rose.

I decided to test the other side of the option table and while TLT was trading at $128.46 still, I sold three TLT May $134 calls for $0.82 each and received $244.75 after paying $1.25 in commission.  I sold these three calls so far out of the money because I wanted their strike to be above the $133 strikes I own (long).  My margin balance only changed slightly again and my Special Memorandum Account improved more.

Knowing that I wouldn’t sling my …

March 18, 2016

Options Expiration – March 2016

Filed under: Finance,Stock Picks - 18 Mar 2016

The only March option I had remaining coming into today was one TLT March $125 naked call.  The other nine, out of my initial 10 March calls, were assigned at the end of February, but I was left with this single contract to deal with.  After the nine TLT March $125 calls were assigned at the end of February, I was forced to buy back 600 of my shares due to a margin call.  I bought these calls for a loss and it made me realize I could be caught by the wash rule if I wasn’t careful.

The wash rule applies to buying a stock again within 30 days of selling for a loss.  The same rule would apply in reverse too.  If I bought a short for a loss, I would face the wash rule if I sold more shares within 30 days.  If I had let my one remaining call be assigned, I would’ve been shorting another 100 shares.  So, I took the less bad trade and bought my call back.  While TLT was trading at $129.43, I bought to close one TLT March $125 call for $4.45 and paid $445.71 including $0.71 in commission.  This trade gave me a realized loss …

March 8, 2016

What is PeepTrade?

Filed under: Media - 08 Mar 2016

First the disclaimer: I’m now a PeepTrade Guru.

Now what it is – Peeptrade.com is a new site (actually still in beta until next week when they present at the South by Southwest Festival) that allows “Peepers” to view the portfolios and trading activity of the “Gurus” allowed on the site.  Each Guru sets their own price and then gets part of the revenue for giving Peepers access to their trading activity.  The system is fully automated, so I finally have a third party tracker to go along with this blog.  Nine years wasn’t too long to wait was it?  I’ll still post updates here, but I’d love some support on PeepTrade too.
The dashboard for the site has a message board where users can post information and questions, essentially a big traders’ forum.  Peepers can see all of the trades for the Gurus they follow and exchange private comments outside of the main message board.

For the past couple of days, I’ve been in first place out of 31 Gurus, but I expect to drop a place or two when …

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