As part of a group of top financial bloggers, I entered a contest to see who could come up with the best stock picks for 2012. We agreed to pick four stocks or ETFs and hold them for the entire year with no changes allowed. Regular My Trader’s Journal readers know I’m not much of a buy and hold investor, so I added in how I’d play this contest if options were allowed also. The results are not based on options, but on pure growth and dividends from our four picks.
As we hit the mid-point of the year, I’m leading the top (of the bottom half) with a year to date loss of 1.37%. My biggest loss comes from my TBT pick that has been beaten down on the bond rally. There’s still enough time in the year that it could reverse big and shoot me well into the top 50% of our group, if not the top one or two spots. I’ll need UWM to keep up its good work and will need an improvement from GLD and GOOG too.
This is how my four picks have done so far along with how my alternate options trades (which are not part of the contest) are working so far.
- GLD – Closed 2011 at $151.99. Closed 3/30/12 @ $162.12. Closed 6/29/12 at $155.19.
- Q1 update: My original GLD June $165 put option has been a great trade so far. At the beginning of the year it was estimated I could sell the contract for $18.00. At Friday’s close it was trading at $6.40 which means I’m up about 8.6% (assuming I held back cash to support these option trades in case of assignment) so far while GLD is up 6.7%.
- Q2 update: My June $165 put would’ve been assigned last month and I’d own 100 shares now for a cost per share of $147 (a 5.57% gain so far). If I left a lot of upside potential for the ETF to move higher, I could sell a December 31st GLD $165 covered call for $5.30 which would reduce my cost per share down to $$141.70. My gains will be capped at break even on the ETF, but I’ll pocket all the premiums even if the option isn’t assigned.
- TBT - Closed 2011 at $18.06. Closed 3/30/12 @ $20.45. Closed 6/29/12 at $15.84.
- Q1 update: My original TBT June $18 put option has been good also. I started with a pretend sell at $1.94. On Friday it closed at $0.29. This gives me a return so far of 10.3% versus the TBT gain of 13.2%. I should’ve sold the put in the money and I’d be looking great now. Either way, 10.3% isn’t a bad return for a quarter.
- Q2 update: My TBT June $18 would’ve been assigned and I’d own 100 shares at $16.06 (a 1.37% loss so far). If I sold a December 21st TBT covered call at the $18 strike I’d receive $0.52 per share and my cost would be reduced down to $15.54. This would push me back to a paper profit and the potential to end with a 15% gain if TBT can turn around.
- UWM – Closed 2011 at $34.86. Closed 3/30/12 @ $43.76. Closed 6/29/12 at 40.42.
- Q1 update: My original UWM July $36 put option was also too conservative, but is doing well. I estimated that I could’ve sold it for $6.50 to start the year. It traded around $1.75 by the end of March. This position is up 16.1% compared to UWM only which is up 25.5%.
- Q2 update: My UWM put is more than $4.00 out of the money and I could buy it back for $0.25 and then sell an October $37 put for $3.00 (the bid/ask right now is $2.50/$3.50). The combination of the buy and sell (aka rolling out and up) would increase my total premiums received by $2.75 net. This would bring my total premium intake up to $9.75 with $37 at risk now which is a return of 35.14% based on cash needed to back the position.
- GOOG - Closed 2011 at $647.07. Closed 3/30/12 @ $641.24. Closed 6/29/12 at $580.07.
- Q1 update: My GOOG June $675 put option was more aggressive than my UWM put while it should’ve been reversed. I figured I could’ve sold the put for $65.00 to start the year. On Friday it was trading at $50.20. While GOOG is down almost 1%, my put has decreased in value, giving me a pretend profit of 2.5% based on my cash reserves. This is my worst pick, but even the stock is down I still have a profit on the option.
- Q2 update: My GOOG pick isn’t so pretty. I would’ve been assigned my put in June at $675 and after deducting the premiums my cost per share would be $610.00. That would leave me with a paper loss of $29.93 (4.91%). I could move myself back to break even on paper by selling a December 21st GOOG covered call at the $610 strike for $29.80 (bid/ask right now is $29.50/$30.10). That would guarantee a loss on the stock itself if assigned, but I could make a return of 5.14% on a bad stock pick if it rallies a little when I include premiums.
This is how everyone is doing in order of best to worst with the percentage gains so far this year. Some of these links are to the older posts and I’ll update them as I receive new links from everyone.