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November 24, 2015

Sold DIS January Naked Put

Filed under: Finance,Stock Picks - 24 Nov 2015

One of the advantages of following just a few stocks closely is that you get to know their behavior.  While I don’t claim to be able to forecast every move that DIS makes, certain set-ups do create fairly predictable price movements.  I mentioned in my last update that I was waiting for DIS to drop back to its 10-day moving average.  It hit new highs yesterday morning after touching its trend line of higher highs, but then faltered.  This morning, DIS fell below its 10-day moving average by $0.08 before recovering.  I should’ve had a limit order in place waiting for the drop, but didn’t.  I hesitated so I could see if DIS fell all of the way to its 20-day moving average before recovering.  While today might not be the near-term bottom, I opted to move forward with my trade while DIS was down more than $2.00 from its intraday high yesterday.

While DIS was trading at $118.09, I sold one DIS January $115 naked put for $3.00 and received $299.20 after paying $0.80 in commission.  Deciding to sell another DIS put was easy.  I’m still bullish on DIS over the next couple of years.  I considered selling the put in …

November 20, 2015

Options Expiration – November 2015

Filed under: Finance,Stock Picks - 20 Nov 2015

It’s weird to think January options expiration is only eight weeks away.  Before that, we had November’s expiration today.  I came into today with four different options expiring, two on DIS, one on IWM and one on FEZ.

I said I wouldn’t regret my DIS covered call two months ago at $110 if it was assigned, but I didn’t really think DIS would race to $120 by today (from $101.73 then).  It did and I’ll be assigned my one DIS November $110 covered call, which will force me to sell my 100 shares of DIS.  I’ll have a realized gain of $201.20 from the first naked put assignment and this covered call assignment even though I’m selling the shares for $5 less than I paid.  This realized gain doesn’t include the DIS October $95 naked put profit of $220.48 I took when I rolled the strike up to the DIS November $100 put.  The DIS November $100 naked put will expire worthless today and give me a realized gain of $358.90 on top of my other DIS profits.

All of these options added together makes for a profitable series of trades for me and I’m glad I didn’t panic when DIS fell …

November 6, 2015

Sold TLT January Naked Calls

Filed under: Finance,Stock Picks - 06 Nov 2015

I’ve been waiting to sell January naked calls on TLT until after I closed out my November calls.  Finally, at the opening bell, while TLT was trading at $119.48, my long-standing limit order hit and I bought to close 10 TLT November $125 naked calls for $0.10 and paid $104.22 including $4.22 in commission.  I could’ve bought these calls for $0.04 later in the morning, but I didn’t think to change my limit order pre-market and somebody got a deal on the other side.  I accomplished my goal though and made a great profit as today’s closing trade gave me a realized gain of $1,141.52.

I’m trying to stay on the path of selling 10 TLT calls per month, always two months out.  This plan leaves me with two lots of calls, one at the closest monthly expiration and the second at the next month out.  After I sell new calls, I enter a limit order at a dime to close them out, good-til-cancelled.  Once the closing order hits, I sell new calls and repeat the process.

Just because that’s the plan doesn’t mean I have stuck to it each month.  Some months, my limit order to close the position hits and …

November 2, 2015

End of the Month Summary – October 2015

Filed under: Account Summary,Finance,Indices - 02 Nov 2015

Like every bull invested in the stock market, I had a fantastic month in October.  It was hard not to have a good month when stocks had their best month out of the past four years with the S&P 500 adding 8%.  I was able to beat the large-cap index again in October because I am still over-invested and also gained from my naked calls on TLT.  The trick now is when to pull back on the reigns and be happy with a gain of more than 15% for the year.  I’m killing the major indexes’ returns for the past year and the year-to-date, but could always make more, assuming I don’t blow it.

I ended October with a Net Liquidation Value (NLV) of $115,009.78 and a Net Asset Value (NAV) of $115,047.65 according to Interactive Brokers (IB) after finishing September with an NLV of $105,054.44.  That gave me a gain of $9,955.34 (~9.48%) on paper for October and a realized gain for the month of $897.27 on only one closing trade.  The realized gain came from my 10 TLT October $125 naked calls and $97.27 in dividends from my IWM position.  Quicken reported that I have an account value of $115,047.66, a penny more than IB shows, but I left it there …

October 16, 2015

Current Positions – October 16, 2015

Filed under: Account Summary,Finance - 16 Oct 2015

I didn’t have any options remaining for October by the time today’s expiration rolled around, so I’m taking the opportunity to give an update on my current positions.

My account value is up to $112,278.78.  I have $26,990.78 in cash, which means I have roughly $32,500 in naked puts that I can’t cover with cash on hand.  My DIS $100 put looks safer every day, while my DIS $110 covered call looks like it is on a path to be assigned next month.  If DIS plays out like I expect and I close my SPY March ’16 $195 put, I’ll have more than enough cash to cover everything else if it’s all assigned.

That sounds nice and easy, but I doubt I’ll go the next month without making more adjustments.  I like taking these snapshot views to get a feel for where I am to help me decide if I need to make changes sooner than later.  For now, I think I’m doing fine with what I have.  I’ll keep watching to see where I think I can make more money next.

Time Value

or Stock Price 

DIS Nov20’15 100 PUT

DIS Nov20’15 110 CALL

IWM Nov20’15 118 CALLS

TLT Nov20’15 125 …

October 8, 2015

Rolled TLT Naked Calls Out and Up

Filed under: Finance,Stock Picks - 08 Oct 2015

As I mentioned the other day, I reached my limit for selling naked calls on TLT.  So, I had to close some of my current short calls to open up margin.  While TLT was trading at $122.54, I bought to close 10 TLT October $125 naked calls for $0.19 and paid $196.07 including $6.07 in commission.  I brought in $1,013.89 when I sold these calls a month ago.  Buying them back today gave me a realized gain of $817.82.

I could’ve waited to let these calls expire worthless in a week and a half, but I wanted to sell new December calls while the premiums were elevated.  I was away from my office when my first order hit, so TLT was able to fall $0.50 between my orders trading and I missed out on a few bucks.  While TLT was trading at $122.04, I sold 10 TLT December $125 naked calls for $1.46 each and received $1,453.89 after paying $6.11 in commission.

I might have been able to do better on the net intake if I had made the trade a few days ago, but I’m not really sure since I didn’t log what each premium was trading for then.  The October calls’ …

October 6, 2015

Sold SPY & MDY December Covered Calls

Filed under: Finance,Stock Picks - 06 Oct 2015

I’ve enjoyed the rally over the past week and the fact that my account balance is back to within about 2% of my highs of the year.  Since we’ve just had a strong multi-day bounce off the recent lows, I figured that we didn’t have too much more upside in the immediate future.  I started looking for a moment when stocks were starting to sputter and saw it this morning.  I think the upside is fairly limited for the next couple of months and I decided today was a good day to sell covered calls on more of my positions.  If I’m assigned, my account balance will be at new highs for the year and I’ll be able to start over with a fresh outlook.

I already sold covered calls on my DIS and IWM shares and wanted to bring in more cash for my SPY and MDY shares.  I started with MDY since I was more confident with my decision.  While MDY was trading at $257.54 ($0.11 below the high of the day), I sold one MDY December $270 covered call for $2.30 and received $229.75 after paying $0.25 in commission.  I knew I didn’t want to go out any further than December …

October 4, 2015

SPY – 3 Month Chart – Monday is Key

Filed under: Finance,Indices,Stock Charts - 04 Oct 2015

The chart below shows the daily prices for the past three months on SPY, an S&P 500 Index ETF, after closing the week at $195.00 on October 2, 2015.

SPY went through a long consolidation period from early February through mid-August when it did not waiver more than nine points from its high to low.  No news could push the large-cap ETF below 204 or above 214, with the majority of days trading between 207 and 212.  The 10, 20 and 50-day moving averages all converged during the final month of tranquility as SPY’s trading range narrowed to an even tighter range.  This period of complacency ended in mid-August when SPY fell in a two-day panic attack as low as 182.40 before recovering to 189.50 by the end of the day.

For some traders, the tantrum seemed over.  SPY had finally had its long-overdue correction with a 14.7% drop from an intraday high of $213.78 in May.  To technical traders, the recovery seemed false and merely what is referred to as a “dead cat bounce” (as in, even a dead cat will bounce …

October 1, 2015

End of the Month Summary – September 2015

Filed under: Account Summary,Finance,Indices - 01 Oct 2015

September pushed my account value lower, but I’m still leading the indexes for the year-to-date by a wide margin.  I took profits on my hedges in September and left money on the table since I didn’t sell my puts at the bottom.  I could’ve made a few hundred dollars more on both my IWM and SPY hedges, but at least I made a profit as stock prices fell.  I also could’ve made more by selling covered calls closer to the money, but I didn’t and still don’t have a covered call on my SPY shares.  The premiums on SPY aren’t rich enough for the strikes I’d be willing to sell, so I’m simply staying long and uncovered for now.  I will probably place a limit order on a far out of the money covered call before too long because I hate to miss out on easy gains from time value, even if it caps my potential gains on a break out.

I ended September with a Net Liquidation Value (NLV) of $105,054.44 and a Net Asset Value (NAV) of $105,154.72 according to Interactive Brokers (IB) after finishing August with an NLV of $107,371.83.  That gave me a loss of $2,317.39 (~2.16%) on paper for September and a realized gain for the …

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