I had another strong month in April. I’m still unwinding some of the trouble I got in back in January (and earlier). Although I’m taking some realized losses for those mistakes occasionally, I’m moving forward which is the entire point. I stopped letting emotions play a roll in my investing again and accepted some losses on NYX and ADBE to end the month with a higher total account balance.
I’m still not convinced we won’t have another pull back before we take off again, but hope the Fed has finished with rate cuts for a while. That can only be the case if they see an improvement in the economy, which apparently they haven’t seen enough of yet.
My account summary for April 2008:
My current account value according to Ameritrade is $85,140.39 and according to Quicken is $85,388.20. Here’s how the returns break down:
12 month return: -2.18%
Since my blog’s beginning (4/8/07): -0.01%
I deposited $2,000 on 4/2/08
According to Morningstar, here’s how I compare to the major indices:
So much for sitting on the sideline and watching. My order for more SFLY naked calls hit this afternoon just before 3:00. While SFLY was trading around 17.45, my order to sell two SFLY June 17.50 calls (QFYFW). I received $308.50 after commissions. I sold these at twice the price of the first four calls I sold, so I received nearly the same cash. My average cost is $1.02 per option now. That gives up up to $18.50 per share before I’m sitting on a loss.
Just three days ago SFLY was trading below 15 which makes me think this run-up before earnings tomorrow is going to turn into a sell-off soon after they announce, unless they destroy expectations. I’m expecting the old “sell on the news” price action. Also worth noting is that although SFLY closed at its high of the day, it hit a ceiling that has been rising of it’s higher highs. The 100 day moving average is below 19. That’s higher than I want SFLY to go, but good to see another road block in it’s path to the moon.
I’ve been tempted to sell June 15 calls, but have held off because I wouldn’t be too surprised to see …
I’ve been sitting back for a few days just watching to find my right entry point for my next trades. I got in too early on SLFY and knew better. My whole theory was that it would stay between 14 and 17.50 and sure enough after I got in a few days ago it climbed up above 17. I entered another limit to sell two more June 17.50 puts, but they haven’t hit yet. I still think it isn’t going too far north.
After profiting on MON earlier this month I’ve been trying to find the right entry point, but wanted it below 115 at a maximum. I entered trade alerts to text me when it got above 120 and below 115. The morning after I entered those I saw MON climb above 120 for a few days. I debated getting in then since I thought it might have legs, but stayed patient. MON broke below 115 this morning. A good entry point might be near for selling OTM naked puts. Even the June 100 strike could be worth the risk.
In the end, I’m waiting to see what the Fed does and how the Street reacts to it. I’m half hoping …
I didn’t realize how long it had been since I last charted the QQQQ until a reader asked me to chart it again. I’m glad I did, because this is an interesting chart. Originally I thought this week would show just another trend line acting as a ceiling soon, but then I revised my moving average to include the 100 and 200 day sma (simple moving average) and saw the QQQQ was caught in between the two longer term moving averages.
The trend lines are worth some attention though. I like seeing three lines in an ascent rather than in a decline. Both the lows and the highs are continuing to reach new near term highs and even when I take out some of the extreme points and draw a trend line more through the middle I see a positive outlook. The middle line could act as support and keep the QQQQ above 46. If that breaks (and I think it will), the next line of support is just barely above 44 and could reach 45 by the time the QQQQ comes back down again.
I drew the horizontal line at 50 where the first three days of trading this year kissed against, as a …
A couple of days ago I placed a limit order to sell naked (uncovered) calls on Shutterfly (SFLY). I’ve profited on SFLY calls twice in the past few months doing the same thing and figured little has changed for it’s near term future and dove back in for more. While SFLY was trading at $15.67, I sold four June 17.50 naked calls (QFYFW) and received $307 after commissions.
Covered calls are a lot more popular because the risk is perceived to be lower, but that’s not 100% true. The upside risk is much lower, but the downside risk is much better by not taking ownership. I think that SFLY could fall lower than its current price, so I am not taking ownership of the underlying stock and therefore am not taking on the downside risk. I am accepting risk to the upside in that SFLY could climb to 25, 50, 100 or any higher price, but I just don’t think that’ll happen. If SFLY climbs above 17.50 by options expiration, I’ll be forced to sell 400 shares which I don’t own, essecially I’m shorting the stock now, but with a cushion and a limited profit.
Now that April options expiration has settled and I’ve regrouped a little, here’s a screenshot of my current holdings as of this morning, pre-market. I’m just over half invested of where I want to be, meaning I can afford to buy almost everything where I have naked puts sold. I’m still aiming to only have half the cash available, but want to see if this rally above 12,700 will hold for the DJI.
While CELG was at 63.58 I sold one June 60 (LQHRL) and received $274.25 after commissions. I put the order in pre-market as I thought CELG would fall to its 20 day moving average. It did and the premium went higher than I thought it would. I left a little money on the table. The bid/ask was 2.65/2.80 pre-market and I put my order in for 2.85. I might have been able to get another $15, so it’s not major, but I like to get as much as possible.
While FWLT was at 67.37, I sold two June 60 naked puts (UFBRL) and received $488.50 after commissions. I still like FWLT long term and the premiums are hard to resist. It worked for me in April on three different options I sold, so I thought I should come back to the well for more. FWLT could falter in the near term, but it will come back and with large premiums, I have a better cushion. FWLT is not for the weak of heart, so steer clear if you can’t take a $10-15 per share swing. I sold over $7 OTM and still got a premium that covers me in a $10 drop. …
I mentioned my plan yesterday for my long plans and made the trades before lunch on Monday.
While DIS was trading at 31.44, I sold three in the money covered calls at the June 30 strike (DISFF) and received $692.75.
While VIP was trading (down for the day) at 30.33, I sold three in the money covered calls at the June 30 strike (VIQFF) and received $488.50.
I sold both of these in the money (ITM) to give me a better chance of exiting the overall series with a profit. ITM covered calls are essecially out of the money (OTM) naked puts. I don’t plan to hold it after expiration and am planning all of my profit from the premium, not the intrinsic value. I’m receiving a fat premium up front, but some of that will be used to wipe away the losses I’m taking on the stock itself. The original OTM naked puts combined with these ITM covered calls will still leave me with a profit on both and if the stocks fall deeper I’ll be sitting at a better place than if I had not sold the options at all and only bought the stocks outright.
