Tuesday, August 24, 2010

SPY - New Position




A new CSP position was established today on SPDR S&P 500 ETF (SPY). All prices include IB commissions.

This position is to test a new strategy of selling puts at least 15% OTM on SPY as an alternative to holding excess cash. The goal is to earn an annualized return equivilent to a 10 Year US Treasury in 30 days or less. With interest rates near zero for an extended period, I'm not earning any interest on the cash in my account. There are not a lot of choices for short term investments which can match 10 Year Treasuries, so I did a study of the S&P 500 closing prices at each option expiration since 1950. The study showed that there have only been 13 months, in the past 60 years, where the S&P 500 has declined by 10% or more, only 2 months where it declined by 15% or more, and only 1 month where it declined by 20% or more (Oct 2008).

Since I want to get as close to a risk free position as posible, 15% downside protection for a 1 month SPY Put seems to be a reasonably safe level, based on the performance of the past 60 years. However, as we all should know by now, past performance is not necessarily indicative of future results. Oct 2008 proved to be one of those times, with the largest 1 month decline in 60 years at 25.1%.

I'm going to test this theory for the next few months with a 100 share position. If it works out well, I'll increase the position size to put more of my idle cash to work when there are no other opportunities available. This month I decided to use the Sep quarterly expiration rather then the normal expiration since it provided better downside protection and a better annualized return.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010SPYCSP Margin UsedCSP 100 SPY @ 87.00 ($8,700.00) 
8/24/2010SPYInitial Put OptionSTO 1 Sep10 87.00 Put @ 0.25  $24.99


Position Summary





Cost Basis($8,700.00)
Income Generated$24.99
Percent Income Generated0.29%
Annualized Income Generated2.91%
Net Profit If Assigned$24.99
Percent Return If Assigned0.29%
Annualized Return If Assigned2.91%
Days Held to Expiration36 days

PG - New Position




A new CSP position was established today on Procter and Gamble (PG). All prices include IB commissions.

This position replaces the one I closed on Monday.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010PGCSP Margin UsedCSP 100 PG @ 60.00 ($6,000.00) 
8/24/2010PGInitial Put OptionSTO 1 Sep10 60.00 Put @ 1.00  $100.24


Position Summary





Cost Basis($6,000.00)
Income Generated$100.24
Percent Income Generated1.67%
Annualized Income Generated25.41%
Net Profit If Assigned$100.24
Percent Return If Assigned1.67%
Annualized Return If Assigned25.41%
Days Held to Expiration24 days

MDT - New Position




A new CSP position was established today on Medtronic Inc (MDT). All prices include IB commissions.

This is the second position on MDT. The first position is a CC.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010MDTCSP Margin UsedCSP 100 MDT @ 30.00 ($3,000.00) 
8/24/2010MDTInitial Put OptionSTO 1 Sep10 30.00 Put @ 0.58  $58.04


Position Summary





Cost Basis($3,000.00)
Income Generated$58.04
Percent Income Generated1.93%
Annualized Income Generated29.42%
Net Profit If Assigned$58.04
Percent Return If Assigned1.93%
Annualized Return If Assigned29.42%
Days Held to Expiration24 days

ITW - New Position




A new CSP position was established today on Illinois Tool Works Inc (ITW). All prices include IB commissions.

This is the second CSP position on ITW.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010ITWCSP Margin UsedCSP 100 ITW @ 37.50 ($3,750.00) 
8/24/2010ITWInitial Put OptionSTO 1 Oct10 37.50 Put @ 0.68  $68.24


Position Summary





Cost Basis($3,750.00)
Income Generated$68.24
Percent Income Generated1.82%
Annualized Income Generated12.77%
Net Profit If Assigned$68.24
Percent Return If Assigned1.82%
Annualized Return If Assigned12.77%
Days Held to Expiration52 days

GD - New Position




A new CSP position was established today on General Dynamics Corporation (GD). All prices include IB commissions.

This is the second position on GD. The first position is a CC.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010GDCSP Margin UsedCSP 100 GD @ 50.00 ($5,000.00) 
8/24/2010GDInitial Put OptionSTO 1 Oct10 50.00 Put @ 0.56  $56.24


Position Summary





Cost Basis($5,000.00)
Income Generated$56.24
Percent Income Generated1.12%
Annualized Income Generated7.90%
Net Profit If Assigned$56.24
Percent Return If Assigned1.12%
Annualized Return If Assigned7.90%
Days Held to Expiration52 days

ADP - New Position




A new CSP position was established today on Automatic Data Processing (ADP). All prices include IB commissions.

This is the second position on ADP. The first position is a CC.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/24/2010ADPCSP Margin UsedCSP 100 ADP @ 36.00 ($3,600.00) 
8/24/2010ADPInitial Put OptionSTO 1 Oct10 36.00 Put @ 0.49  $48.99


Position Summary





Cost Basis($3,600.00)
Income Generated$48.99
Percent Income Generated1.36%
Annualized Income Generated9.55%
Net Profit If Assigned$48.99
Percent Return If Assigned1.36%
Annualized Return If Assigned9.55%
Days Held to Expiration52 days

Monday, August 23, 2010

TGT - Closed




The Target (TGT) CSP position was closed today. All prices include IB commissions.

Position Summary





Cost Basis$4,500.00
Net Profit$169.03
Percent Return3.76%
Annualized Return14.59%
Days Held to Expiration94 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010TGTCSP Margin UsedCSP 100 TGT @ 45.00 ($4,500.00) 
5/21/2010TGTInitial Put OptionSTO 1 Sep10 45.00 Put @ 2.08Closed $207.99
8/23/2010TGTBuy BackBTC 1 Sep10 45.00 Put @ -0.39  ($38.96)
8/23/2010TGTCSP Margin ReturnedCSP 100 TGT @ -45.00  $4,500.00
8/23/2010TGT Net Cost/Profit-Loss ($4,500.00)$169.03
DTE94 Percent Profit-Loss/Annualized 3.76%14.59%

PG - Closed




The Procter and Gamble (PG) CSP position was closed today. All prices include IB commissions.

Position Summary





Cost Basis$5,250.00
Net Profit$122.13
Percent Return2.33%
Annualized Return9.03%
Days Held to Expiration94 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010PGCSP Margin UsedCSP 100 PG @ 52.50 ($5,250.00) 
5/21/2010PGInitial Put OptionSTO 1 Oct10 52.50 Put @ 1.48Closed $148.14
8/23/2010PGBuy BackBTC 1 Oct10 52.50 Put @ -0.26  ($26.01)
8/23/2010PGCSP Margin ReturnedCSP 100 PG @ -52.50  $5,250.00
8/23/2010PG Net Cost/Profit-Loss ($5,250.00)$122.13
DTE94 Percent Profit-Loss/Annualized 2.33%9.03%

PEP - Closed




The PepsiCo Inc (PEP) CSP position was closed today. All prices include IB commissions.

Position Summary





Cost Basis$5,750.00
Net Profit$200.18
Percent Return3.48%
Annualized Return13.52%
Days Held to Expiration94 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010PEPCSP Margin UsedCSP 100 PEP @ 57.50 ($5,750.00) 
5/21/2010PEPInitial Put OptionSTO 1 Oct10 57.50 Put @ 2.37Closed $237.14
8/23/2010PEPBuy BackBTC 1 Oct10 57.50 Put @ -0.37  ($36.96)
8/23/2010PEPCSP Margin ReturnedCSP 100 PEP @ -57.50  $5,750.00
8/23/2010PEP Net Cost/Profit-Loss ($5,750.00)$200.18
DTE94 Percent Profit-Loss/Annualized 3.48%13.52%

Friday, August 20, 2010

KO - Adjustment




The following adjustment was made on today on Coca Cola Company (KO). All prices include IB commissions.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/20/2010KOBuy Back and Roll OutBTC 1 Aug10 55.00 Call @ -0.30  ($30.01)
8/20/2010KOContinued TradeSTO 1 Sep10 55.00 Call @ 1.05  $104.54


Current Position Summary





Cost Basis($5,500.00)
Income Generated$516.48
Percent Income Generated9.39%
Annualized Income Generated13.03%
Net Profit If Assigned$516.48
Percent Return If Assigned9.39%
Annualized Return If Assigned13.03%
Days Held to Expiration263 days


Trade History




















DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/28/2009KOCSP Margin UsedCSP 100 KO @ 55.00 ($5,500.00) 
12/28/2009KOInitial Put OptionSTO 1 Feb10 55.00 Put @ 0.67Expired $67.00
2/22/2010KOContinued TradeSTO 1 Mar10 55.00 Put @ 0.85Exercised $84.99
3/19/2010KOCSP Margin ReturnedCSP 100 KO @ -55.00 $5,500.00 
3/19/2010KOStock AssignedEX 1 Mar10 55.00 Put @ -55.00 ($5,500.00) 
4/5/2010KOContinued TradeSTO 1 Apr10 55.00 Call @ 0.46  $45.99
4/16/2010KOBuy Back and Roll OutBTC 1 Apr10 55.00 Call @ -0.08  ($8.01)
4/16/2010KOContinued TradeSTO 1 May10 55.00 Call @ 1.17Closed $116.99
5/21/2010KOBuy Back and Roll OutBTC 1 May10 55.00 Call @ -0.01  ($1.00)
5/21/2010KOContinued TradeSTO 1 Aug10 55.00 Call @ 0.92Closed $91.99
7/1/2010KODividend ReceivedDIV 100 Dividend @ 0.44  $44.00
8/20/2010KOBuy Back and Roll OutBTC 1 Aug10 55.00 Call @ -0.30  ($30.01)
8/20/2010KOContinued TradeSTO 1 Sep10 55.00 Call @ 1.05  $104.54
9/17/2010KO Totals ($5,500.00)$516.48
DTE263 Percent Income/Annualized 9.39%13.03%

Monday, August 2, 2010

PAYX - New Position




A new CC position was established today on Paychex Inc (PAYX). All prices include IB commissions.

Criteria for Selection:


  • Dividend Champions Status = Contender (Deleted 10/18/10)
  • Years of Consectutive Dividend Increases = 20
  • Years of Positive Free Cash Flow (last 10 years) = 10
  • Discount to Morningstar's Fair Value Estimate = 37%








DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/2/2010PAYXInitial Stock PositionBTO 200 PAYX @ 26.24 ($5,247.00) 
8/2/2010PAYXInitial Call OptionSTO 2 Dec10 27.50 Call @ 0.74  $148.57


Position Summary





Cost Basis($5,247.00)
Income Generated$148.57
Percent Income Generated2.83%
Annualized Income Generated7.54%
Net Profit If Assigned$401.57
Percent Return If Assigned7.65%
Annualized Return If Assigned20.39%
Days Held to Expiration137 days

MDT - Adjustment




The following adjustment was made today on Medtronic Inc (MDT). All prices include IB commissions.







DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
8/2/2010MDTBuy Back and Roll Out/DownBTC 1 Aug10 44.00 Call @ -0.04  ($3.96)
8/2/2010MDTContinued TradeSTO 1 Nov10 42.00 Call @ 0.44  $44.04


Current Position Summary





Cost Basis($4,400.00)
Income Generated$294.96
Percent Income Generated6.70%
Annualized Income Generated11.54%
Net Profit If Assigned$94.96
Percent Return If Assigned2.16%
Annualized Return If Assigned3.72%
Days Held to Expiration212 days


Trade History















DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
4/21/2010MDTCSP Margin UsedCSP 100 MDT @ 44.00 ($4,400.00) 
4/21/2010MDTInitial Put OptionSTO 1 May10 44.00 Put @ 0.94Exercised $94.14
5/21/2010MDTCSP Margin ReturnedCSP 100 MDT @ -44.00 $4,400.00 
5/21/2010MDTStock AssignedEX 1 May10 44.00 Put @ -44.00 ($4,400.00) 
5/21/2010MDTContinued TradeSTO 1 Aug10 44.00 Call @ 1.38Closed $138.24
7/30/2010MDTDividend ReceivedDIV 100 Dividend @ 0.23  $22.50
8/2/2010MDTBuy Back and Roll Out/DownBTC 1 Aug10 44.00 Call @ -0.04  ($3.96)
8/2/2010MDTContinued TradeSTO 1 Nov10 42.00 Call @ 0.44  $44.04
11/19/2010MDT Totals ($4,400.00)$294.96
DTE212 Percent Income/Annualized 6.70%11.54%

LLTC - Closed




The Linear Technology Corp (LLTC) position was closed today. All prices include IB commissions.

Linear Technology Corp was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary





Cost Basis$5,600.00
Net Profit$494.64
Percent Return8.83%
Annualized Return44.16%
Days Held to Expiration73 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010LLTCCSP Margin UsedCSP 200 LLTC @ 28.00 ($5,600.00) 
5/21/2010LLTCInitial Put OptionSTO 2 Aug10 28.00 Put @ 2.61  $522.87
8/2/2010LLTCBuy BackBTC 2 Aug10 28.00 Put @ -0.14  ($28.23)
8/2/2010LLTCCSP Margin ReturnedCSP 200 LLTC @ -28.00  $5,600.00
8/2/2010LLTC Net Cost/Profit-Loss ($5,600.00)$494.64
DTE73 Percent Profit-Loss/Annualized 8.83%44.16%

EXPD - Closed




The Expeditors International (EXPD) position was closed today. All prices include IB commissions.

Expeditors International was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary





Cost Basis$3,750.00
Net Profit$274.13
Percent Return7.31%
Annualized Return36.55%
Days Held to Expiration73 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010EXPDCSP Margin UsedCSP 100 EXPD @ 37.50 ($3,750.00) 
5/21/2010EXPDInitial Put OptionSTO 1 Aug10 37.50 Put @ 2.90  $290.14
8/2/2010EXPDBuy BackBTC 1 Aug10 37.50 Put @ -0.16  ($16.01)
8/2/2010EXPDCSP Margin ReturnedCSP 100 EXPD @ -37.50  $3,750.00
8/2/2010EXPD Net Cost/Profit-Loss ($3,750.00)$274.13
DTE73 Percent Profit-Loss/Annualized 7.31%36.55%

DOV - Closed




The Dover Corp (DOV) position was closed today. All prices include IB commissions.

Dover Corp was near fair value so, as per my trading plan, I decided to close it and look for a new opportunity.

Position Summary





Cost Basis$4,000.00
Net Profit$227.78
Percent Return5.69%
Annualized Return28.47%
Days Held to Expiration73 days


Trade History











DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/21/2010DOVCSP Margin UsedCSP 100 DOV @ 40.00 ($4,000.00) 
5/21/2010DOVInitial Put OptionSTO 1 Sep10 40.00 Put @ 2.50  $249.54
8/2/2010DOVBuy BackBTC 1 Sep10 40.00 Put @ -0.22  ($21.76)
8/2/2010DOVCSP Margin ReturnedCSP 100 DOV @ -40.00  $4,000.00
8/2/2010DOV Net Cost/Profit-Loss ($4,000.00)$227.78
DTE73 Percent Profit-Loss/Annualized 5.69%28.47%