It’s that time of the year.  Time for the Q3 update in our 2012 stock picking contest.  The rules are simple.  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 really 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.

I had a great third quarter and moved from sixth place to third.  If bonds would fall further, I’d have a chance to really move higher.  That’s a very possible outcome going into the end of the year, but only if the fiscal cliff resolution doesn’t drag out all of the way to its deadline of December 31st.

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.  Closed 9/28/12 at $171.89.
    • 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.
    • Q3 Update: Apparently, I cut myself off too low with my Q2 change, but I’m letting it ride through December.
  • TBT - Closed 2011 at $18.06.  Closed 3/30/12 @ $20.45.  Closed 6/29/12 at $15.84.  Closed 9/28/12 at $15.59.
    • 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.
    • Q3 Update:  TBT is such a flawed ETF, but it hasn’t had much of a chance to go my way yet with 20-year treasuries rising as yields fall.  I’m close to break even now, but have room for some good gains still.  I’m not making any adjustments right now.
  • UWM – Closed 2011 at $34.86.  Closed 3/30/12 @ $43.76.  Closed 6/29/12 at 40.42.  Closed 9/28/12 at $44.09.
    • 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.
    • Q3 Update: UWM has worked well for me.  It’s well over my October $37 strike price, so I could buy the put back for $0.20 (bid/ask is $0.10/0.25) and sell a new put.  December contracts aren’t posted yet, so I’d use a January contract instead.  To take a chance, I could sell an at-the-money put at the January $44.00 strike for $3.90 (bid/ask is $3.60/4.20).  This rolling out and up of the puts would add another $3.70 in premiums for me and bring my total to $13.45 with $30.55 at risk (strike minus total net premiums received).  If it works out, I’ll have a gain of 44%, but the contest ends before this last option expires, so my final return will be a little less.  It’ll be a lot less if UWM losses ground before the end of the year.
  • GOOG - Closed 2011 at $647.07.  Closed 3/30/12 @ $641.24.  Closed 6/29/12 at $580.07.  Closed 9/28/12 at $754.50.
    • 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.
    • Q3 Update:  GOOG finally came through as a good pick for this contest, but I would’ve played the options wrong and cut out a lot of my gains.  I’m letting it run as it is, but think this one is pretty much done as it is.

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.

  1. WhereDoesAllMyMoneyGo: 21.99%
  2. Intelligent Speculator: 17.52%
  3. MyTradersJournal: 10.67%
  4. DividendGrowthInvestor: 10.39%
  5. DividendMantra: 5.32%
  6. MillionDollarJourney: 4.49%
  7. PassiveIncomeEarner: 1.34%
  8. TheWildInvestor: -2.21%
  9. TheFinancialBlogger: -11.04%
  10. BeatingTheIndex: -13.77%