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September 16, 2016

Options Expiration – September 2016

Filed under: Finance,Stock Picks - 16 Sep 2016

I had no September options left in my account to expire today, but finally sold a covered call on some of my long shares. I have 200 shares of IWM in my account, but decided to only sell one covered call today. I’ve had such a mental block against making this trade for so long that I finally figured I could push past it by only covering half of my IWM shares. I was right in not selling covered calls since the spring while IWM was climbing, but after topping out last week, I opted to start the process of bringing in more premiums outside of TLT again.

While IWM was trading at $121.61, I sold one IWM November $123 covered call for $2.80 and received $279.33 after paying $0.67 in commission. My plan for the past few months was to sell covered calls on these shares closer to $125 and yet I didn’t pull the trigger when IWM broke above $125.00. By selling this single covered call at the $123 strike and bringing in $279.33, my exit price will be $125.79 if assigned.

If IWM runs above $125.79, I’ll have my uncovered 100 shares left to gain ground. Then again, I …

September 13, 2016

End of the Month Summary – August 2016

Filed under: Account Summary,Finance,Indices - 13 Sep 2016

(Sorry for the delay on this post. I wrote it on 9/1, but apparently forgot to hit “Publish”.)

It is a lot more fun to make money than to lose money, but I assume y’all knew that already. I was due for a good month in my account again and August delivered. TLT, IWM, and MDY all gained ground for me, while DIS cost me another $149.00. I had to pay my monthly medicine in the form of dividends and interest for my short TLT position, but I gained $1,861.41 on the TLT price drop, so it worked out for me.

I ended August with a Net Liquidation Value (NLV) of $77,777.76 and a Net Asset Value (NAV) of $77,780.47 according to Interactive Brokers (IB) after finishing July with an NLV of $75,272.47. The difference in month end values gave me a gain of $2,505.29 (~3.22%) on paper for August and a realized gain of $507.90 on two closing trades. I received no dividends and paid $415.98 in short interest and dividends for my short TLT shares. The net total was a realized profit of $91.92 in August. Quicken reported that I have an account value of $77,839.00, the same as IB’s reported NAV after accounting for interest and dividend accruals of -$58.53. To get the Quicken …

September 8, 2016

Rolled TLT $136 Puts in Calendar Spread

Filed under: Finance,Stock Picks - 08 Sep 2016

I picked a good day to roll my options, but could’ve timed it better. That’s the story of this series of TLT trades I’ve been working since last year. Then again, as long as TLT is dropping, I can’t be too upset. My September TLT options had gotten cheap enough to exit and figured I should go for more premiums two months out rather than try to sit and wait out the next seven trading days (including today) to make another $43 from time value erosion.

While TLT was trading at $139.12, I bought to close three TLT September $136 covered puts for $0.14 each and paid $43.09 including $1.09 in commission. I thought briefly about waiting to see if the opening slide for TLT would continue, but I’ve been burned on that misjudgment some recently, so I opted to pull the trigger right away. While TLT was trading at $139.19, I sold to open three TLT November $136 covered puts for $1.96 each and received $586.90 after paying $1.10 in commission. TLT is trading at $137.58 as I write this and I’m down $194 on my new covered puts, so it would’ve been a good day to wait for my …

August 31, 2016

Rolled Sept TLT Covered Puts

Filed under: Finance,Stock Picks - 31 Aug 2016

I have two legs of TLT September covered puts and decided I needed to roll some of them today. I meant to do this earlier, but have been focused on my work in client accounts more than my personal trading.

While TLT was trading at $140.00, I bought to close five TLT September $132 puts for $0.06 and paid $30.81 including $0.81 in commission. I turned around as soon as this order hit and while TLT was trading at $141.05, I sold to open five TLT October $136 covered puts for $1.25 each and received $623.17 after commission.

The September $132 covered puts have been cheap for a while and I regret not making the time to roll them earlier. I brought in $338.18 originally and after closing them today for $30.81, I have a realized gain of $307.37. However, I also paid out $129.07 at the beginning of August in dividends for the 500 shares I’m short. That leaves me with an actual gain of $307.37. The good news is that TLT dropped $2.26 since I sold these September puts, so I made another $1,130 that goes towards reducing my paper loss on these shares.

I decided to push my strike higher this time …

August 19, 2016

Options Expiration – August 2016

Filed under: Account Summary,Finance,Stock Picks - 19 Aug 2016

I had no options expire today, but did roll one of my legs of TLT covered puts. I also considered selling covered calls on my long (MDY, IWM, and DIS) positions finally, but couldn’t pull the trigger. The upside potential is just too small for what I want right now. I think my brain is a little skewed by my over-allocation in TLT and am having a hard time focusing on the “base hits” I need to keep working on. Then again, I’ve been smart not to sell covered calls on IWM and MDY as they’ve both had strong runs since their lows at the end of June. I would’ve done well by selling covered calls on DIS already and might get to it next week.

I plan to roll more of my TLT covered puts, but for now I only started with one leg. While TLT was trading at $138.65, I bought to close my five TLT September $131 covered puts for $0.13 each and paid $67.65 including $2.65 in commission. I immediately turned around and sold five TLT October $133 covered puts for $0.94 each and received $468.17 after paying $1.83 in commission (net received was $400.52 for rolling the …

August 1, 2016

End of the Month Summary – July 2016

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

I had another bad month in July. TLT was the main cause of my paper losses with $3,789.73 of lost value during July. DIS lost another $116.00 for me, but my IWM and MDY long positions returned more than $2,400 to help soften the blow. My TLT puts covered my TLT short interest and dividends, plus a few more dollars. TLT is lower at the open today and as I think each time, this could be the start of its longer-term decline.

I ended July with a Net Liquidation Value (NLV) of $75,272.47 and a Net Asset Value (NAV) of $75,178.51 according to Interactive Brokers (IB) after finishing June with an NLV of $76,299.67. The difference in month end values gave me a loss of $1,027.20 (~1.35%) on paper for July and a realized gain of $167.88 on two closing trades. I also received $279.91 in dividends and paid $383.48 in short interest and dividends for my TLT short shares. The net total was a realized profit of $64.31 in July. Quicken reported that I have an account value of $75,252.97, two cents more than IB’s reported NAV after accounting for interest and dividend accruals of -$74.44. I’m going to let the discrepancy run for another month to see if it corrects with a rounding …

July 15, 2016

Options Expiration – July 2016

Filed under: Account Summary,Finance - 15 Jul 2016

As has been the case a few other times this year, I had no options expire today. I don’t even have any scheduled to expire next month. So, I’ll take the time to give another positions update. This is what’s in my account as of this afternoon.

IWM: 200 shares long
MDY: 200 shares long
DIS: 100 shares long
TLT: 1,300 shares short

3 TLT September $136 covered puts
5 TLT September $132 covered puts
5 TLT September $131 covered puts

I was tempted to buy back some of my covered puts today as TLT continued its price decline, but I decided to wait for it to fall below the intraday low from June 30, at $138.08. That price was the low for the week after the Brexit vote when TLT gapped higher two days in a row. I expect TLT to fall below my put strikes eventually and want to exit before I give up too much, but I’m also hesitant since I’ve been wrong about its timeline to decline for a while.

I also considered selling some covered calls on my IWM, MDY, and DIS shares, but they’ve become a sideshow in my account compared to TLT. Even if I …

July 9, 2016

TLT Chart – July 8, 2016

Filed under: Finance,Indices,Stock Charts - 09 Jul 2016

The chart below shows the monthly prices for the past 10 years on TLT, an ETF that tracks the US 20-year Treasury Index, after closing the week at $143.60, on July 8, 2016.

Technical indicators are not infallible, but are popular because they provide accurate guidance in most instances, especially when multiple indicators issue the same signals, as in the TLT chart. In this chart, the easiest indicators to use are the straight trend lines shown in purple. The upper trend line of higher highs shows where TLT has met resistance to further gains in each rally since the end of 2008. July marks the fourth attempt by the ETF to push above this trend line. The first touch of a trend line is only a starting point. The second touch is a hinge that guides the trend line for future resistance points. The third touch of a trend line is often a strong telling point where failure to break through resistance can quickly lead to a powerful reversal in price, as it did in …

July 8, 2016

Small TLT Option Trade

Filed under: Finance,Stock Picks - 08 Jul 2016

I still had 300 shares of TLT that I was short without any options surrounding them after selling new TLT covered puts earlier this week. When TLT spiked again today, I was close to another margin call and was thinking about taking a realized loss on some of the shares. Before I made that trade, I came up with an alternate plan.

While TLT was trading at $143.39, I sold three TLT September $136 covered puts for $1.10 each and received $328.90 after paying $1.10 in commission. One alternative was to sell some of my long shares of DIS, IWM, or MDY. I didn’t want to do that since they have momentum going now – at least today. I could also have bought to close some of my short shares of TLT and taken a big loss. I didn’t want to do that yet either, but realize that time might come soon.

I’m trying to avoid buying back my TLT shares yet because I continue to believe TLT will reverse sooner than later. I’ve been wrong for so long that I’m beginning to doubt myself, but prefer to push it a little longer. By selling covered puts with higher strikes, I’m bringing in …

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