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December 8, 2016

Sold QQQ Naked Put

Filed under: Finance,Stock Picks - 08 Dec 2016

After waiting for many months, I realize I should’ve waited even longer before selling covered calls on my IWM and MDY shares. Both calls are trading in the money now. The good thing about that is I can start selling more naked puts with less risk of losing on every position when the market eventually has more than a day or two lower.

While QQQ was trading at $118.79, I sold one QQQ February $117 naked put for $2.55 and received $254.32 after paying $254.32 in commission. I haven’t made a trade on QQQ in a long time and didn’t want to sell a new SPY naked put while at all-time highs. QQQ has been fairly range bound since August. I expect this consolidation phase to end within a couple of months with QQQ moving higher, but if it continues, I want to buy in on the low end of the trading channel. QQQ has stayed between $115-119 for all but a few days for nearly four and a half months.

Selling this put with QQQ at the high end might not be the best move, my cost per share if I’m assigned the naked put will be only $114.46. I’m comfortable …

December 2, 2016

Wrote DVY Naked Put

Filed under: Finance,Stock Picks - 02 Dec 2016

As I mentioned a couple of times recently, my goal is to have is to have a less volatile account for the next few months. After the dust settles in my personal life, I plan to ramp up my risk again. Until then, I’m planning to use lower volatility ETFs for my at the money naked puts and farther out of the money naked puts or at the money covered calls on the more volatile ETFs and stocks.

Since I’m already long IWM and MDY shares with covered calls, I figured I should have some large cap exposure. While DVY was trading at $87.33, I sold one DVY January $87 naked put for $1.65 and received $164.75 after paying $0.25 in commission. I opted to sell it almost at the money since DVY isn’t as volatile (beta of 0.66) as SPY or DIA. I’m also only 66% invested after this trade, so if we see a big “swoosh” lower”, I have plenty of cash available to buy in cheaper and/or ride it out.

If DVY loses ground, I expect it to find support close to $85.55, around its 61.8% Fibonacci line. DVY also found resistance and then support around this level on …

December 1, 2016

End of the Month Summary – November 2016

Filed under: Account Summary,Finance,Indices - 01 Dec 2016

November was an amazing month, but for those of us who were short bonds, it was even better. I finally exited my TLT position in full as the price plummeted. I could’ve made more by hanging on and rolling my puts lower, but decided the easy money was made and I didn’t want the risk in my account right now, mostly for short-term personal reasons over concerns of the risk in staying short.

I ended November with a Net Liquidation Value (NLV) of $90,956.43 and a Net Asset Value (NAV) of $90,985.79 according to Interactive Brokers (IB) after finishing October with an NLV of $84,028.47. The difference in month end values gave me a gain of $6,927.96 (~8.24%) on paper for November and a realized loss of $4,516.22 on eight closing trades. (IB lists my realized loss for November as $6,371.00, due to a difference in calculating the base of my TLT short position, a difference of $1,854.78. I ran a report for the full year and IB shows a loss $581.82 greater than what Quicken reports. I’m not going to bother trying to figure out the cause of the multiple errors since I use IB’s tax forms and the total balance amounts match.) I received no dividends and paid $394.50 in short interest and dividends for my short …

November 22, 2016

Finished TLT Position

Filed under: Finance,Stock Picks - 22 Nov 2016

The last of my TLT limit orders hit this afternoon and I am finally completely out of my long series of TLT trades. While TLT was trading at $121.40, I bought to cover 500 shares of TLT at $121.40 and bought to close five TLT December $130 covered puts for $8.94. The combined order sold for $130.34 and I paid $65,176.41 including $6.41 in commission.

TLT dropped as I expected when I originally sold naked calls in September 2015, but it took a detour to $143.59 in the meantime and clearly I didn’t expect that much of a spike. The trade cost me an overall profit for 2016 since I had to sell some of my long positions for a loss after Brexit and had to buy back some of my short TLT shares far above what I wanted to for an additional loss, thanks to margin calls.

The trade had the right idea behind it, but I went too big with my position and didn’t have the cash to back it when it went against me for a few months. I should’ve hedged, but got greedy thinking that history would repeat and there would be a lower ceiling on the ETF. I …

November 21, 2016

Updates on TLT, IWM, and MDY Options

Filed under: Finance,Stock Picks - 21 Nov 2016

Last week I mentioned I was in the process of starting over with my allocation. I’m moving slowly, but moving forward nonetheless. At the open, when TLT was trading at $121.15, my limit order hit and I bought to close 500 short shares of TLT for $121.15 and bought to close five TLT December $131 covered puts for $10.18 each. I paid $65,671.41 for the combination, including $6.41 in commission. I still have 500 TLT shares I’m short that are coupled with five TLT December $130 covered puts. The limit order I have in place to close those shares and options is still a few cents below the bid/ask. I’ll probably let it run into next week to see if it hits. If the order hasn’t hit yet, I will probably raise my limit to get out before the end of the month to avoid paying short dividend and interest again. I’d be happy to see TLT run back into the mid $120s so I could sell new naked calls (or a vertical call spread) out of the money.

Since stocks have rallied so much since the election, I decided the might be getting close to a short-term top. Small-caps have …

November 18, 2016

Options Expiration – November 2016

Filed under: Account Summary,Finance,Stock Picks - 18 Nov 2016

My only November option left to expire was the an IWM covered call. I could’ve let it expire and be called away. That inaction on my part would’ve saved me $2.38 in commission for this trade, but the data entry is easier this way in Quicken and I decided my couple of minutes saved is worth the commission expense.

While IWM was trading at $130.70, I sold 100 shares of IWM and bought one IWM November $123 covered call for a net price of $123.00. I received $12,297.62 after paying $2.38 in commission. It’s a shame I had to pay $7.70 to buy the $123 covered call since I could’ve bought it before the election for less than $0.20. I almost placed the order on Friday before the election, but decided I didn’t need to for two reasons. I’d save $20 by letting it expire worthless when I didn’t think there was a 1% chance that IWM would climb more than $7 in two weeks to be assigned. I also was long 200 shares, so I figured if I was wrong, at least the other half of my IWM holdings would gain, which it did very nicely. A $7 gain only took …

November 17, 2016

Account Cleaning, Starting with TLT

Filed under: Finance,Stock Picks - 17 Nov 2016

I had a bad run with my TLT options and short shares and then it turned in my favor, but I didn’t close (or at least roll) my covered puts in time to make up as much as I would’ve liked. I could push for a better gain by rolling my put strikes lower or I could simply exit and start over. To begin with, I decided to take the first steps towards exiting and starting over.

While TLT was trading at $121.76, I bought to close 300 shares of TLT for $121.76 and bought to close 3 TLT November $136 covered puts for $14.25 each. I paid $40,806.85 for the combination order, including $3.85 in commission.

I hate to say it, but I don’t even know what I made or lost on this series of trades. I stopped tracking each trade on my spreadsheet months ago when I had too much going on. I do know that I was forced to take losses on other positions post-Brexit due to a margin call and bought back some of my TLT shares for a loss around the same time too. So, even if I had maintained my TLT tracking, it wouldn’t truly represent …

November 1, 2016

End of the Month Summary – October 2016

Filed under: Account Summary,Finance,Indices - 01 Nov 2016

As scary as October can be some years, I had another fantastic month this October. As the S&P 500 declined, my account balance increased. I’m making up for lost ground still, but months like this past one go a long way in helping me get there. The declines in my long shares were more than made up for by the declines in my short shares. Even with a net loss from my options, the net gain from my stocks and ETFs outweighed the negative.

I ended October with a Net Liquidation Value (NLV) of $84,028.47 and a Net Asset Value (NAV) of $84,019.93 according to Interactive Brokers (IB) after finishing September with an NLV of $80,348.45. The difference in month end values gave me a gain of $3,680.02 (~4.58%) on paper for October (while the S&P 500 fell 1.94%) and a realized loss of $901.53 on two closing trades. I received $111.25 in dividends from my MDY shares and paid $385.67 in short interest and dividends for my short TLT shares. The net total was a realized loss of $1,175.95 in October on top of the $7.14 I paid for the balance of my monthly minimum fee. Quicken reported that I have an account value of $84,019.93 the same as IB’s reported NAV after accounting for interest and dividend accruals of -$49.44.

The single …

October 21, 2016

Options Expiration – October 2016

Filed under: Account Summary,Finance,Stock Picks - 21 Oct 2016

October options expiration worked out better for me than I expected just a few days ago. After I overpaid to roll my TLT October $135 puts earlier this week (compared to the price today), I was able to roll my TLT October $133 puts for nearly a full profit. While TLT was trading at $133.31, I bought to close five TLT October $133 covered puts and sold five TLT December $130 puts for a net premium of $1.33 per combination. I received $658.16 for the trades after paying $6.84 in commission.

The trades hit in four different transactions with the December puts selling for $1.39 or $1.40 and the October puts trading for $0.06 or $0.07. I could’ve taken the chance and waited until the final few minutes of the day to let the October puts expire worthless, but I decided to lock in the gain on my October puts while I could and bring in a good premium on the December puts before the shares moved any higher. As luck would have it, TLT dropped as low as $132.87 in the early afternoon and I could’ve made more, but I’m happy with getting $1.39 for the December puts that are …

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