Today's Trades

I made several adjustments today and opened 3 new dividend positions. Most of the adjustments were Interim Trades, meaning I sold calls at a strike price below my net cost basis, which would result in a loss if these calls are exercised. So, I'll have to monitor them closely and possibly roll them out if they go ITM in order to avoid assignment. These positions are down quite a lot but they continue to bring in cash flow. Some pay dividends, which help, but some don't. I'm going to try to manage my way out of the non-dividend paying stocks, but this is going to take some time.

The 3 new positions I established today were all dividend plays, with ex-dividend dates approaching. I've started tracking the highest yielding dividend paying stocks looking for opportunities around their ex-dividend date. I then research the company's fundamentals, dividend history, and valuation. Once I find a company I like, I look to see if I can find a covered call position that meets my return requirements. This is the start of my revised strategy, which is still in development. But I thought I'd try out a few positions first to see if it's viable. The BBT position I established earlier this month will most likely get called away, since the stock has taken off recently. I'm missing out on the capital gains though, unless I decide to average up and roll out the calls. But it's so deep ITM now, I may just let it get called. This is the downside to covered calls known as opportunity risk. In this case a buy & hold strategy would have been better. But who knows when a stock is going to take off like this? Certainly, not me.

This has been a wild week in the market. I'm glad I sat on the sidelines for the past 2 days. Sometimes doing nothing is the best thing you can do. When the market goes crazy like this, you need to stay calm and look at the "businesses" you own, not the "stocks". Then ask yourself, did the company fundamentals change between Friday and Tuesday? If the answer is "No", then don't worry about what Mr. Market thinks your stocks are worth. Mr. Market isn't always right, and can be quite irrational in either direction. Eventually, price follows value. As Ben Graham said "in the short-term the market is a voting machine, in the long-term it's a weighing machine". Joe Ponzio, at F Wall Street wrote a great article the other day on The Markets. It's worth reading and remembering in times like this.