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Stocks Investments :End of Month Summary – September 2011

admin — Thu, 13 Oct 2011 11:56:55 +0000

September was just an ugly month for me. There’s no way to sugar coat it. I expected a flattening or possibly even a rise from the lows of the end of August, but we didn’t see the carry through that started at the end of August, instead we saw further selling and since

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September was just an ugly month for me. There’s no way to sugar coat it. I expected a flattening or possibly even a rise from the lows of the end of August, but we didn’t see the carry through that started at the end of August, instead we saw further selling and since my account was sitting at a tipping point my losses were bigger than the market’s losses on a percentage basis. Throw in an ill timed short trade using SDS and I lost some more. If the markets can get a rally into the end of the year as many are predicting I should do well since I have so many plays using ultra ETFs that are in the money. I also have a small handful of options that have some time value left to expire. That time value will help propel my returns into the end of the year. More than anything my options are in the money and I don’t have a lot of time value, but more intrinsic value that will require gains lasting more than two or three days. I don’t mind adding more exposure on the bottom side of this trading channel, but am very weary of a break below 1,100 on the S&P 500.

Since most stocks have been caught in a trading channel for the past couple of months I would’ve done better by selling some covered calls closer to the money, but I didn’t and I’m afraid that opportunity has passed. I’m hesitant to sell calls close to the current low prices, but also don’t want to say the same sob story at the end of October. More than likely I’ll ease into some of these calls and while I cap some potential gains I’ll bring in some cash to help reduce my losses and will also leave other shares free to ascend without calls covering them.

This is the breakdown of the numbers for me:

The VIX ended the month at 42.96 and the VXN ended at 44.98. Both of these are up again from the prior few months’ levels and help increase the premiums on the options we sell. Over the past couple of months when the VIX has risen above 40 it has been a good time to buy stocks again, but that doesn’t mean history will repeat itself yet again. It might, but the VIX has certainly gone above 40 for extended periods in the past and might do it again. Depending on your time horizon, this could be a great time to sell volatility and pocket the premiums or get into some stocks/ETFs at lower prices. Just be ready to take some short term losses if the market turns against you in the near term.

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Stock Market Investment :End Of Month Summary – August 2011

admin — Sat, 03 Sep 2011 12:59:52 +0000

The Dow Jones and S&P 500 lost close to 4.5% and 5.5% respectfully in July. My losses were more than that, but it appears some of it is tied up in time value as volatility spiked which leaves me good room to recover, even if the markets stay flat. The shift pushed me below the [...]

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The Dow Jones and S&P 500 lost close to 4.5% and 5.5% respectfully in July. My losses were more than that, but it appears some of it is tied up in time value as volatility spiked which leaves me good room to recover, even if the markets stay flat. The shift pushed me below the year to date returns for most of the major indexes. The chase for performance through December 31st is going to be interesting with only four months remaining in the year.

After the drop in equity prices, a larger portion of my account is in puts that are in-the-money. Luckily for me, I didn’t panic at the August lows and when I was assigned shares from my options I stayed long and didn’t even cover most of these stocks and ETFs with covered calls. That simple patience allowed me to ride the bounce higher into the end of the month and I regained more than ,000 from the low.

One of the reasons for my change (previously I would have been prone to sell covered calls immediately after being assigned) was that I’m actually trading more based on a market timing model. I’ve been posting a chart of an index nearly every weekend almost since the beginning of this blog, but rarely made many trades based on my own technical analysis. That has changed. Now I’m combining my own technical analysis with another market timing system run by a friend of mine. Of course I pay attention to fundamentals somewhat and have a growing interest in dividend paying stocks, but the charts have tended to be better indicators for my trading style than most other methods. I just have to act when they “speak”.

This is the breakdown of the numbers for me:

The VIX ended the month at 38.96 and the VXN ended at 31.37. Both of these are up substantially from the prior few months’ levels and help increase the premiums on the options we sell. The trick with rising volatility is always whether or not the ascent is over yet or not. If your riding the option all of the way to expiration and don’t mind taking ownership of the stock/ETF, the increase in volatility is just good news.

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Stocks Investments :Options Expiration – August 2011

admin — Sat, 03 Sep 2011 12:59:52 +0000

Not that it’s a surprise to anyone, but this is not a good options expiration Friday for my account. All of my naked puts finished in the money and all of my covered calls finished out of the money. These are the 11 options I was short going into the day. CSX – 1 August [...]

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Not that it’s a surprise to anyone, but this is not a good options expiration Friday for my account. All of my naked puts finished in the money and all of my covered calls finished out of the money.

These are the 11 options I was short going into the day.

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Stocks Investment :End of the Month Summary – June 2011

admin — Mon, 04 Jul 2011 13:01:12 +0000

June finished its seventh year in a row as a losing month for the Dow Jones Industrial Average. This helped me gain back some footing on the major indices for most of the month and even pushed me ahead of them briefly, but the final four days of the month saw such a big rally [...]

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June finished its seventh year in a row as a losing month for the Dow Jones Industrial Average. This helped me gain back some footing on the major indices for most of the month and even pushed me ahead of them briefly, but the final four days of the month saw such a big rally that my lead vanished on the Dow and Midcap 400. I had a lot of my option positions expire in June which helped me stay more in cash than usual while the markets fell. I started adding back some exposure, but not enough or soon enough to ride the past few days’ ride back up. I did gain some more cushion on almost every position I’m in and have a fair amount of time value and even some intrinsic value left to decay over the coming months.

I’m picking up my exposure one day at a time while the risk trade appears to be on still. With half of the year in the books I’m not far behind where I’d like to be in regards to my year to date returns, but since I have a handful of options that expire in January, the majority of their extrinsic value has yet to deteriorate. That will help me a good bit over the next six and a half months. I’m trying to open up more exposure in the front two months to take advantage of the quickest time decay period. As the risk goes up, so does the return.

As I was starting to put this post together yesterday I noticed my combined brokerage accounts broke 0,000 intraday. I think this just happened for the first time yesterday and didn’t hold on until the end of the day by a few bucks. I was close in late May and then started losing ground. I forgot about it for a while, even after adding ,000 this month since I knew I was down, but this week’s rally did it for me. It’s amazing how fast I got from 0k to 0k when I compare how long it took me to go from k to 0k. Throwing a major recession in when I was at ,000+ didn’t help the race to 0k just as the pay cut around then didn’t either. My contract is up for renewal in the next couple of months and then after that I’ll be working for myself full time as an advisor and might have to take deductions for the first time ever from my trading accounts while I focus my efforts on growing my practice. Hopefully I’ll either build my practice up much better in the next 14 months or will get an offer to become an employee to give me more time to grow my business.

The VIX ended the month at 16.52 and the VXN ended at 17.86. These levels are close to what they were at the end of May, but we enjoyed a nice spike during June. I say it was a nice spike because it gave us some opportunities to sell options at higher premiums than we’ve seen out there lately. With some of the data coming through starting to look better again I think volatility will continue to fall. Selling options, mainly puts seems to be the best approach right now. The only other approach worth considering is buying longer dated calls in the hopes the rally lasts longer and can pay off. With cheaper option premiums right now this doesn’t take a lot of capital risk to put in place.

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Stock Market Investment :Options Expiration – April 2011

admin — Sat, 23 Apr 2011 10:23:36 +0000

I had short options on four different stocks/ETFs that expired today. All were profitable and I plan to work with all of them again for either May or June expiration options. My only April option that wasn’t profitable was QCOM and it was assigned a couple of days ago and

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I had short options on four different stocks/ETFs that expired today. All were profitable and I plan to work with all of them again for either May or June expiration options. My only April option that wasn’t profitable was QCOM and it was assigned a couple of days ago and has gained some ground since then.

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Stocks Investments :My Trader’s Journal’s 4 Year Birthday

admin — Sat, 23 Apr 2011 10:23:36 +0000

Four years ago today I wrote my first post for MyTradersJournal.com. While I haven’t earned the riches from blogging that I dreamed of originally I’ve learned a lot from many of you and continue to enjoy writing it. In the past four years I have only missed blogging about a trade once on the same day it executed and even on that trade I still got the post up before the market opened the next day. I write this on the side from my jobs I’ve had over the years and even credit my relationships I’ve started through My Trader’s Journal with leading me into one of my current roles, as an Investment Advisor. I thank all of you who come back frequently and read my ramblings and hope that you learn as much from me as I do from you.

I’ve been missing in action some lately. This week is spring break for my seven year old son and that means he’s been home with me while I work most of the week. That’s kept me away from the blog somewhat and also the sluggish market has kept me from diving in to anything new while I wait to see what’s coming next. Also, I doubt I’ll get a full index chart post up this weekend since I’m going camping, but plan to get a chart up by tomorrow morning and would be interested in seeing some analysis from some of you on where you think the chart is pointing.

I’m not in a rush to overload too much still since volatility has fallen back so much and I have a lot in play already. I’ll start adjusting more next week though as my six April options come up on expiration. I’m not looking too shabby on most of them, but I know a full week is a lot of time and they all could be a few bucks in either direction by this time next week.

This is what I have in my account right now:

Long Open Positions

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Stock Investment :Options Expiration – February 2011

admin — Wed, 23 Feb 2011 13:36:38 +0000

Today ended up being an easy options expiration for my taxable portfolio. I only had three separate options expire today on VXX, VNQ and BA. This is how they each played out along with my next steps:

One VXX February 22 covered call – This worked like clockwork. I’m long

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Today ended up being an easy options expiration for my taxable portfolio. I only had three separate options expire today on VXX, VNQ and BA. This is how they each played out along with my next steps:

I’d love to see a dip on Monday for the market so I could squeeze in some orders at slightly better prices. My wash rule limitations on UCO and JPM are over after the weekend and I plan to get back in on both again. UCO has fallen back to where I’ll probably sell some puts at the same price where I exited with my covered calls last month. I’m basically starting right back where I was with one month of time value lost in my UCO addiction.

I’ve been taking smaller probability risks this year by selling longer term options and/or selling farther OTM. After being burned every year by one or two bad trades I’m trying to limit that risk this year and haven’t even been taking as many risks as I should. I’ve noticed I seem to be selling puts so that I always take a full profit on the option, but maybe I should aim for some that have a little more risk (and reward) and might only end with a partial profit or small loss. I hate to change to a different strategy until we get a correction. Since I’ve been light stepping this long it’s probably not the time to change without at least a decent dip in the market.

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Stocks Investments :Current Portfolio – February 11, 2011

admin — Wed, 23 Feb 2011 13:36:38 +0000

I’ve intentionally not traded this week. Since I’ve been selling so many longer term options lately I thought I should take a step back, let the dust settle and see how (a little) time affects my current portfolio. With volatility currently so low compared to the past

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I’ve intentionally not traded this week. Since I’ve been selling so many longer term options lately I thought I should take a step back, let the dust settle and see how (a little) time affects my current portfolio. With volatility currently so low compared to the past couple of years the option selling trades aren’t jumping off the screen for me, so I’m being patient or at least trying to be. I’m still entering orders, they just aren’t hitting yet since I’m pricing all of them for at least a little dip before they hit. I have one on MVV that expires today and isn’t close to hitting any more. I have another on UWM I just entered that is set to last through next Wednesday. I entered the order $content.25 above the last trade’s price along with a couple of my clients’ orders. Surprisingly, one of theirs hit instantly. The other two contracts are still up for sale and I wouldn’t be surprised if they don’t even hit by the time the order expires. Then again, a nice dip this afternoon or early next week is all it needs to bring the bid up to it.

I didn’t even realize it until I started writing this post and double checked my positions and saw that my BA covered call was assigned at .50 at the end of the day on Tuesday, 2/8/11. This one was kind of interesting because the week before I made this covered call trade we discussed it in the comments section of another post. I opted to aim higher with my strike than was being advised and now it looks like I should’ve gone even higher since BA is .00 above the covered call strike that was assigned and I missed out on the dividend too. The dividend wasn’t my goal as much as the premiums were (two puts and one covered call for 4.84 total). I still have one put set to expire worthless that’s out-of -the-money (OTM). I might get back in on BA when the April contracts are posted.

I’m still not fully invested like I planned to be by now, so next week I feel I’ll have to get off my tail and start ponying up for some more risk. For now, this is what’s in my Interactive Brokers account with a balance of 4,135.58:

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Stock Market Investment :End of Month Summary – January 2012

admin — Wed, 23 Feb 2011 13:36:38 +0000

January turned out to be a good month after I came into it expecting some give back, but from what I’ve read on the S&P 500, it has never had a streak of four straight down months for January. 2011 ended the streak at three and kept the rally’s momentum going.

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January turned out to be a good month after I came into it expecting some give back, but from what I’ve read on the S&P 500, it has never had a streak of four straight down months for January. 2011 ended the streak at three and kept the rally’s momentum going. I’m still expecting some sort of pull back of at least 5%, but we’ve seen some good numbers come through that make that tough right now. For example, yesterday Chicago PMI came in with its best reading since 1988. One of the reasons I switched to using LEAPS and longer term options is that it removes some of the second guessing from my trades. I’m forcing myself into keeping exposure for longer periods instead of trying to time every dip. I’ll continue to try to time dips, but not with my full account – just for some added spice. I really should be more heavily invested right now than I am. I was hoping the drop on this past Friday was going to turn into something bigger so I could really load up more. I still want to see a solid move over SPX 1,300 and INDU 12,000 before I get too anxious and jump the gun. Today has it so far, we’ll see if we can get a follow through tomorrow.

Based on my current LEAPS only, I should end the year with a gain of around 9.67% if all work out. Without taking on any margin and assuming my other positions earn 10% I’m in line for a total gain of 14.55%. That, of course, is in a perfect world with no more stupid moves like I had on VXX last year. To even out that uncertainty I’m going to continue to add more exposure most weeks throughout the entire year if we stay flat or move higher. If we see the markets move lower I’ll buy some on dips, but won’t chase too far. Right now I have the luxury of not having to chase much to get the return I’d like by year’s end. If the markets end positive I’d like to be able to make 20% for the year, so to get there I need to keep working my account. If they flatten out I’ll be happy with 7-10%. That’s the area I’m on track for so far since some of my options need some more growth in their underlying ETFs before I can claim a full profit. Before long I’ll be back on possible margin with new trades and won’t have to take many risks to increase my return for the year.

The VIX ended the month at 19.55 and the VXN ended at 21.88. While volatility continues to fall the chance and severity continues to increase. When that’s going to happen is anybody’s guess. The VIX and VXN have more room possible to move to the downside before they come close to their previous lows. I guess the ride will continue for now.

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Stock Investments :Options Expiration – December 2010

admin — Sat, 25 Dec 2010 11:59:16 +0000

I had a mixed options expiration for December with two of my options expiring while the underlying stock was trading above the strike and the other two finished below the strike. Here are the details:

MDY December 145 naked put – This one finished far out of the money and

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I had a mixed options expiration for December with two of my options expiring while the underlying stock was trading above the strike and the other two finished below the strike. Here are the details:

Along with the four options I had expiring today I had a little surprise hit too. A few days ago I entered a limit order to close my AFL naked put if its value dropped some more. This morning while AFL was trading at .70 it hit and I bought to close one AFL January 50 naked put at $content.30 and paid .01 with commissions. That gave me a realized gain of 1.98 in half the time I originally planned. I didn’t see much benefit in waiting another five weeks to have an additional .00 in profit after the majority of the premium had already melted away. I might sell a new naked put on AFL on Monday once I see what the February options look like, but I’m not sure I want to chase it yet. It might be a better idea to wait for a small dip before jumping back in.

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