I added a new feature on the blog today that has a list of recommended articles from the various blogs and websites I follow with Google Reader. Whenever I come across an article that I think you'll find interesting I'll add it to my shared items in Google Reader. The top 10 headlines will then appear in the Recommended Articles section on the sidebar of this blog. You can also go to my shared items page and bookmark it. There's also a feed available that you can subscribe to.
Hope you enjoy this new feature.
Wednesday, June 6, 2007
Tuesday, June 5, 2007
A Consistent Approach
Another good question posted on the Yahoo Group asked "Should your strategy be consistently applied or vary depending on your overall stock market outlook?"
The following is an excerpt of the discussion that followed.
I prefer a consistent approach. I have no idea what the market, or any stock, is going to do in the short term, and don't believe anyone else does either. Therefore, I don't trust my own market outlook, let alone anyone else's. So, if I can't trust my outlook, why would I want to vary my strategy based on it? I designed my strategy to work regardless of market conditions. At least that was my plan. Whether or not it will work in all markets only time will tell. So far I've only traded my strategy in a bull market, where throwing darts at a stock list probably could have been profitable ;-) So, until the next bear market comes along I won't know how my strategy will perform. I do know that I've survived stocks that have declined substantially, so I believe I could survive a bear market, but until it actually happens I won't know for sure. In the meantime, I'll continue to consistently apply my strategy. If it ain't broke, don't fix it ;-)
The only belief we can have in any individual stock or the market in general, is that it can and will do anything at anytime. We can not presume to know what the market will do today, tomorrow or in the future. Now, this doesn't mean I don't have any opinions. Of course I have an opinion on each company I invest in and on the overall market, but I designed my strategy to be market and company neutral, just in case my opinion is wrong.
Positions that meet my criteria will profit in 4 out of 5 cases (assuming I sold ITM):
1. If the stock stays the same.
2. If the stock goes up a little.
3. If the stock goes up a lot.
4. If the stock goes down a little.
5. If the stock goes down a lot.
The only case where I lose is #5, if the stock declines substantially. However, since I only invest in solid companies using a value investing approach, I just manage those positions until they can be closed at a profit. So, I have yet to take a loss.
I have confidence in my trading plan and my ability to follow it, not in my ability to pick winners or in my short term market outlook. I do believe that over the long term the market will rise, because it always has, but I have no idea what the market, or any stock, will do in the short term.
That's why I never try to pick a direction. I don't buy stocks for my CC portfolio because I think they will rise. I buy stocks because the underlying company is solid and it meets my criteria for a CC position that profits in 4 out of 5 cases. It's the 4 out of 5 chances to make money on an ITM CC position that drives the success, not the prediction of direction. I have no idea how each position will work out but I like the odds.
Now, I didn't always think this way. For many years I studied and used technical analysis, which attempts to determine direction from past price action. I studied Elliot Wave, regression channels, Bollinger Bands, MACD, Stochastics, Relative Strength, etc., etc. Too many indicators and chart patterns to mention.
I've always heard the saying "past performance does not guarantee future results", however, when you see a pattern on a stock chart, whether it's there or not (research studies have shown that people see patterns where they don't exist. It's just the way our brains are wired), you believe that it will repeat. So many who follow technical analysis to pick direction believe in their outlook. I used to believe in my outlook also, but my results told a different story. I learned the hard way that nobody can predict, with any degree of certainty, what a stock or the market will do at any given point in time, regardless of how much analysis you do. The future is unpredictable.
Now I no longer try to determine direction, of a stock or the market, and no longer use technical analysis. Instead, I use fundamental analysis and value investing principles to analyze the company. My main concern, when choosing stocks for my CC portfolio, is whether or not the company will survive, not what its stock price will do, which is why I only invest in solid companies. My CC positions are such that I profit from little or no movement of the stock price. Even if the stock goes down substantially, I have confidence the company will survive and that its stock price will eventually rise. But even if it doesn't rise, I have confidence in my trading plan and my ability to manage the position to eventually exit at a profit.
In essence I've evolved over time as an investor to find the approach that works best for me. Investing is an evolutionary process. I've tried, and failed, with many different approaches until I finally found what works for me. It's a personal journey and everyone will travel a different road. Those who are willing to change and evolve will eventually be successful, assuming they don't lose all their money along the way.
The following is an excerpt of the discussion that followed.
I prefer a consistent approach. I have no idea what the market, or any stock, is going to do in the short term, and don't believe anyone else does either. Therefore, I don't trust my own market outlook, let alone anyone else's. So, if I can't trust my outlook, why would I want to vary my strategy based on it? I designed my strategy to work regardless of market conditions. At least that was my plan. Whether or not it will work in all markets only time will tell. So far I've only traded my strategy in a bull market, where throwing darts at a stock list probably could have been profitable ;-) So, until the next bear market comes along I won't know how my strategy will perform. I do know that I've survived stocks that have declined substantially, so I believe I could survive a bear market, but until it actually happens I won't know for sure. In the meantime, I'll continue to consistently apply my strategy. If it ain't broke, don't fix it ;-)
The only belief we can have in any individual stock or the market in general, is that it can and will do anything at anytime. We can not presume to know what the market will do today, tomorrow or in the future. Now, this doesn't mean I don't have any opinions. Of course I have an opinion on each company I invest in and on the overall market, but I designed my strategy to be market and company neutral, just in case my opinion is wrong.
Positions that meet my criteria will profit in 4 out of 5 cases (assuming I sold ITM):
1. If the stock stays the same.
2. If the stock goes up a little.
3. If the stock goes up a lot.
4. If the stock goes down a little.
5. If the stock goes down a lot.
The only case where I lose is #5, if the stock declines substantially. However, since I only invest in solid companies using a value investing approach, I just manage those positions until they can be closed at a profit. So, I have yet to take a loss.
I have confidence in my trading plan and my ability to follow it, not in my ability to pick winners or in my short term market outlook. I do believe that over the long term the market will rise, because it always has, but I have no idea what the market, or any stock, will do in the short term.
That's why I never try to pick a direction. I don't buy stocks for my CC portfolio because I think they will rise. I buy stocks because the underlying company is solid and it meets my criteria for a CC position that profits in 4 out of 5 cases. It's the 4 out of 5 chances to make money on an ITM CC position that drives the success, not the prediction of direction. I have no idea how each position will work out but I like the odds.
Now, I didn't always think this way. For many years I studied and used technical analysis, which attempts to determine direction from past price action. I studied Elliot Wave, regression channels, Bollinger Bands, MACD, Stochastics, Relative Strength, etc., etc. Too many indicators and chart patterns to mention.
I've always heard the saying "past performance does not guarantee future results", however, when you see a pattern on a stock chart, whether it's there or not (research studies have shown that people see patterns where they don't exist. It's just the way our brains are wired), you believe that it will repeat. So many who follow technical analysis to pick direction believe in their outlook. I used to believe in my outlook also, but my results told a different story. I learned the hard way that nobody can predict, with any degree of certainty, what a stock or the market will do at any given point in time, regardless of how much analysis you do. The future is unpredictable.
Now I no longer try to determine direction, of a stock or the market, and no longer use technical analysis. Instead, I use fundamental analysis and value investing principles to analyze the company. My main concern, when choosing stocks for my CC portfolio, is whether or not the company will survive, not what its stock price will do, which is why I only invest in solid companies. My CC positions are such that I profit from little or no movement of the stock price. Even if the stock goes down substantially, I have confidence the company will survive and that its stock price will eventually rise. But even if it doesn't rise, I have confidence in my trading plan and my ability to manage the position to eventually exit at a profit.
In essence I've evolved over time as an investor to find the approach that works best for me. Investing is an evolutionary process. I've tried, and failed, with many different approaches until I finally found what works for me. It's a personal journey and everyone will travel a different road. Those who are willing to change and evolve will eventually be successful, assuming they don't lose all their money along the way.
38 Steps to Becoming a Trader
To continue with the topic of what it takes to be a successful investor, here's a list I found some time ago, which I'm sure most traders/investors can identify with.
1. We accumulate information - buying books, going to seminars and researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the markets we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch markets again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to take more time and more knowledge than we anticipated.
Most people will give up at this point, as they realize work is involved.
15. We get serious and start concentrating on learning a 'real' methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but over all we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We feel we are very close to crossing that threshold of successful trading.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear), and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.
1. We accumulate information - buying books, going to seminars and researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the markets we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch markets again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to take more time and more knowledge than we anticipated.
Most people will give up at this point, as they realize work is involved.
15. We get serious and start concentrating on learning a 'real' methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but over all we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We feel we are very close to crossing that threshold of successful trading.
22. We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear), and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had always dreamed of.
Monday, June 4, 2007
Successful Investing
Someone on the Yahoo Group asked a very important question, "What skills are needed to be a successful covered call investor". I thought I'd post my response here as well, for those readers who have not joined the group.
I don't believe it takes great intelligence to be a successful investor. In fact, sometimes too much knowledge is a bad thing. Success is not a function of how smart you are or how much you have applied yourself academically. Look at me, I never went to college and yet I have a successful career as a programmer, and I'm having success as an investor, and I ain't that smart ;-)
Skills can be learned, but I believe that success in investing comes down to the following personal attributes:
Passion
You must be passionate about investing and enjoy analyzing companies. You should do it because it's fun, not because of the money you can make. Don't let the money blind you. This is serious business and if you're not passionate about it, you won't give it your all. Be an avid reader and learn all you can about investing from those who have been successful, like Benjamin Graham, Warren Buffett, Joel Greenblatt, David Dreman, Mohnish Pabrai, etc. You'll gain invaluable insight learning from these successful investors and begin to develop your own market philosophy.
Confidence
You must have confidence in yourself, your methodology, and your ability to succeed. Research different methodologies and modify them so as to make them your own. Self-confidence comes from developing a methodology that YOU believe in. It doesn't come from trading someone else's methodology. It's easier to have confidence and be able to follow your own rules then someone else's.
Attitude
Attitude is how you deal with the inevitable adverse situations that occur in the markets. Not all trades will work out as planned. You must have a positive attitude, even in the face of adversity. Never give up. Once you've dug yourself out of a hole, no matter how long it takes, you know that you can do it again. If you've done something once, it's a repeatable act. That knowledge is a powerful weapon and can make you a much stronger person and better investor.
Self-Belief
You must believe that you can actually do it. Everyone is capable of being a successful investor if they truly believe they can be. You must believe in the power of belief. If a person's will is strong enough, they will always find a way. If you admit to yourself that you truly don't have the will to win at this game, then put your money into an index fund and go do something you love.
Discipline
You must have the discipline to control your emotions and follow your trading plan without question. This is the culmination of all the previous attributes. If you are passionate about investing, have confidence in your method, have the right attitude, and believe in yourself, you'll develop the discipline to follow your trading plan.
That's it. Sounds easy doesn't it? But it's not. Making personal changes is probably the hardest part of being a successful investor.
I don't believe it takes great intelligence to be a successful investor. In fact, sometimes too much knowledge is a bad thing. Success is not a function of how smart you are or how much you have applied yourself academically. Look at me, I never went to college and yet I have a successful career as a programmer, and I'm having success as an investor, and I ain't that smart ;-)
Skills can be learned, but I believe that success in investing comes down to the following personal attributes:
Passion
You must be passionate about investing and enjoy analyzing companies. You should do it because it's fun, not because of the money you can make. Don't let the money blind you. This is serious business and if you're not passionate about it, you won't give it your all. Be an avid reader and learn all you can about investing from those who have been successful, like Benjamin Graham, Warren Buffett, Joel Greenblatt, David Dreman, Mohnish Pabrai, etc. You'll gain invaluable insight learning from these successful investors and begin to develop your own market philosophy.
Confidence
You must have confidence in yourself, your methodology, and your ability to succeed. Research different methodologies and modify them so as to make them your own. Self-confidence comes from developing a methodology that YOU believe in. It doesn't come from trading someone else's methodology. It's easier to have confidence and be able to follow your own rules then someone else's.
Attitude
Attitude is how you deal with the inevitable adverse situations that occur in the markets. Not all trades will work out as planned. You must have a positive attitude, even in the face of adversity. Never give up. Once you've dug yourself out of a hole, no matter how long it takes, you know that you can do it again. If you've done something once, it's a repeatable act. That knowledge is a powerful weapon and can make you a much stronger person and better investor.
Self-Belief
You must believe that you can actually do it. Everyone is capable of being a successful investor if they truly believe they can be. You must believe in the power of belief. If a person's will is strong enough, they will always find a way. If you admit to yourself that you truly don't have the will to win at this game, then put your money into an index fund and go do something you love.
Discipline
You must have the discipline to control your emotions and follow your trading plan without question. This is the culmination of all the previous attributes. If you are passionate about investing, have confidence in your method, have the right attitude, and believe in yourself, you'll develop the discipline to follow your trading plan.
That's it. Sounds easy doesn't it? But it's not. Making personal changes is probably the hardest part of being a successful investor.
WMT - Adjustment
The following adjustment was made today on WMT:
Last week Walmart announced its plans for a share buyback, which was good news for shareholders. The stock closed up almost 4% on Friday. Today, the stock continued to rise about 3.50%. With the stock price above $51, the Jun08 47.50 call was deep ITM and had very little time value left. I needed to make an adjustment to avoid assignment. As always, I try to roll the calls for a net credit. With the Jun08 47.50 call at $3.80 ask, this was not going to be possible, since I couldn't find a further out higher strike for that price. So, since Walmart is still rated 5 Stars by Morningstar and is still a good buy at this price, I decided to add another 100 shares and sell 2 Dec08 52.50 calls for a net credit.
04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -
Current Position Summary:
Stock Investment: $10,045.00
Income Generated: $196.50
Percent Income Generated: 1.96%
Net Profit If Called: $651.50
Percent Return If Called: 6.49%
Annualized Return If Called: 9.78%
Days to Expiration: 242 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WMT @ 49.26 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 52.50 Call @ 0.10 - Expired
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 - Closed
04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
Last week Walmart announced its plans for a share buyback, which was good news for shareholders. The stock closed up almost 4% on Friday. Today, the stock continued to rise about 3.50%. With the stock price above $51, the Jun08 47.50 call was deep ITM and had very little time value left. I needed to make an adjustment to avoid assignment. As always, I try to roll the calls for a net credit. With the Jun08 47.50 call at $3.80 ask, this was not going to be possible, since I couldn't find a further out higher strike for that price. So, since Walmart is still rated 5 Stars by Morningstar and is still a good buy at this price, I decided to add another 100 shares and sell 2 Dec08 52.50 calls for a net credit.
04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -
Current Position Summary:
Stock Investment: $10,045.00
Income Generated: $196.50
Percent Income Generated: 1.96%
Net Profit If Called: $651.50
Percent Return If Called: 6.49%
Annualized Return If Called: 9.78%
Days to Expiration: 242 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WMT @ 49.26 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 52.50 Call @ 0.10 - Expired
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 - Closed
04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
Wednesday, May 23, 2007
KCI - Adjustment
An adjustment was made today on KCI (see bottom of this post). This adjustment is quite complex so I'll take some time to explain it.
History:
KCI was originally purchased in Aug05 at $59.83. This is a solid company which had a virtual monopoly on it's vacuum-assisted closure (VAC) product until Medicare and Medicaid Services announced their decision to use the same reimbursement code for competitor BlueSky Medical and its own VAC product in Oct05. The stock gapped down from $56.00 to close at $34.94, or down about 38%, the following day. At this point the stock position was down about 42%.
In Mar06, I bought an additional 100 shares of KCI and now have an average cost basis, excluding option premiums, of $49.53.
Then in Aug06, KCI lost a patent infringement case against BlueSky Medical and once again the stock gapped down from $42.58 to close at $24.95, or down about 41%. At this point the stock position was down about 50%.
The Dec 35 Call options were an interim trade, meaning they were below the cost basis, and at a strike that I did not want to sell the stock. This is one strategy used to recover a losing position, but it must be monitored closely.
With less than 2 weeks until Dec expiration, the Dec 35 Calls were ITM and had only .10 time value left so the decision was made to roll out to Jun07 and up to the 40 strike to avoid assignment.
Position Summary:
Stock Investment: $9,906.00
Income Generated: $1,454.00
Percent Income Generated: 14.68%
Net Profit If Called: -$452.00
Percent Return If Called: -4.56%
Annualized Return If Called: -2.44%
Days to Expiration: 683 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09
20-Mar-06 - Dollar Cost Averaging - BTO 100 KCI @ 39.23
20-Mar-06 - Combined Cost Basis - $9,906.00 200 @ 49.53
20-Mar-06 - Interim Trade - STO 2 Sep06 45.00 Call @ 4.59
18-Sep-06 - Interim Trade - STO 2 Dec06 35.00 Call @ 0.94
05-Dec-06 - Buy Back & Roll Out/Up - BTC 2 Dec06 35.00 Call @ -3.69
05-Dec-06 - Interim Trade - STO 2 Jun07 40.00 Call @ 4.00
This position consists of 200 shares bought at different times and for different prices. The second purchase was at 39.23, which is below the 40 strike. I could let those 100 shares get called away for a profit, so I decided to spilt the position into 2 positions as follows:
Position #1 Summary:
Stock Investment: $5,983.00
Income Generated: $869.00
Percent Income Generated: 14.52%
Net Profit If Called: -$1,114.00
Percent Return If Called: -18.62%
Annualized Return If Called: -9.95%
Days to Expiration: 683 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83 -
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29 - Expired
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54 - Closed
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11 -
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44 - Closed
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11 -
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04 - Closed
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11 -
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69 - Expired
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39 - Expired
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09 - Expired
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Continued Trade - STO 1 Jun07 40.00 Call @ 4.00 -
Position #2 Summary:
Stock Investment: $3,823.00
Income Generated: $585.00
Percent Income Generated: 14.91%
Net Profit If Called: $662.00
Percent Return If Called: 16.87%
Annualized Return If Called: 13.63%
Days to Expiration: 452 days
Trade History:
20-Mar-06 - Dollar Cost Averaging - BTO 100 KCI @ 39.23 -
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Interim Trade - STO 1 Jun07 40.00 Call @ 4.00 -
Since it's very likely that Position #2 will get called away at June expiration, resulting in a profit, I'll just let it get called away.
Position #1 needed to be adjusted to avoid assignment, which would result in a loss. So, I bought back the Jun07 40 call today for 10.21, since it was ITM with very little time value left. My plan says to roll out to a further month and up to a higher strike for a net credit. The problem was that there wasn't a higher further out strike selling for anywhere near 10.21. Normally the solution to this problem is to dollar cost average by buying an additional 100 shares of stock and selling 2 call options at 5.11 each or more. I always limit my positions to 5% or less of total capital. Doing a DCA would exceed this limit. However, since Position #2 is most likely to be called away at June expiration, I decided to temporarily exceed my 5% limit. So, I made the following adjustment:
23-May-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 40.00 Call @ -10.21 -
23-May-07 - Dollar Cost Averaging - BTO 100 KCI @ 49.87 -
23-May-07 - Combined Cost Basis - $10,970.00 200 @ 54.85 -
23-May-07 - Interim Trade - STO 2 Jan08 50.00 Call @ 6.20 -
Position #1 After Adjustment:
Stock Investment: $10,970.00
Income Generated: $1,088.50
Percent Income Generated: 9.92%
Net Profit If Called: $118.50
Percent Return If Called: 1.08%
Annualized Return If Called: 0.44%
Days to Expiration: 900 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83 -
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29 - Expired
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54 - Closed
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11 -
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44 - Closed
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11 -
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04 - Closed
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11 -
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69 - Expired
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39 - Expired
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09 - Expired
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Interim Trade - STO 1 Jun07 40.00 Call @ 4.00 - Closed
23-May-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 40.00 Call @ -10.21 -
23-May-07 - Dollar Cost Averaging - BTO 100 KCI @ 49.87 -
23-May-07 - Combined Cost Basis - $10,970.00 200 @ 54.85 -
23-May-07 - Interim Trade - STO 2 Jan08 50.00 Call @ 6.20 -
Now I could let this position get called away in Jan and end up with a very small profit or I may be able to continue with this position and get more profit out of it. Note that I've brought in almost 10% income during the holding period which has been reinvested into other positions.
This is not one of my better positions. I made a few mistakes along the way but I should still be able to get out with my initial investment and thereby preserve my capital. Some would say taking the loss and moving on to another position would be a better use of the funds, and they may be right, but who's to say that the next position would be any better. A primary goal of my trading plan is capital preservation so I do what I can to avoid losses.
History:
KCI was originally purchased in Aug05 at $59.83. This is a solid company which had a virtual monopoly on it's vacuum-assisted closure (VAC) product until Medicare and Medicaid Services announced their decision to use the same reimbursement code for competitor BlueSky Medical and its own VAC product in Oct05. The stock gapped down from $56.00 to close at $34.94, or down about 38%, the following day. At this point the stock position was down about 42%.
In Mar06, I bought an additional 100 shares of KCI and now have an average cost basis, excluding option premiums, of $49.53.
Then in Aug06, KCI lost a patent infringement case against BlueSky Medical and once again the stock gapped down from $42.58 to close at $24.95, or down about 41%. At this point the stock position was down about 50%.
The Dec 35 Call options were an interim trade, meaning they were below the cost basis, and at a strike that I did not want to sell the stock. This is one strategy used to recover a losing position, but it must be monitored closely.
With less than 2 weeks until Dec expiration, the Dec 35 Calls were ITM and had only .10 time value left so the decision was made to roll out to Jun07 and up to the 40 strike to avoid assignment.
Position Summary:
Stock Investment: $9,906.00
Income Generated: $1,454.00
Percent Income Generated: 14.68%
Net Profit If Called: -$452.00
Percent Return If Called: -4.56%
Annualized Return If Called: -2.44%
Days to Expiration: 683 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09
20-Mar-06 - Dollar Cost Averaging - BTO 100 KCI @ 39.23
20-Mar-06 - Combined Cost Basis - $9,906.00 200 @ 49.53
20-Mar-06 - Interim Trade - STO 2 Sep06 45.00 Call @ 4.59
18-Sep-06 - Interim Trade - STO 2 Dec06 35.00 Call @ 0.94
05-Dec-06 - Buy Back & Roll Out/Up - BTC 2 Dec06 35.00 Call @ -3.69
05-Dec-06 - Interim Trade - STO 2 Jun07 40.00 Call @ 4.00
This position consists of 200 shares bought at different times and for different prices. The second purchase was at 39.23, which is below the 40 strike. I could let those 100 shares get called away for a profit, so I decided to spilt the position into 2 positions as follows:
Position #1 Summary:
Stock Investment: $5,983.00
Income Generated: $869.00
Percent Income Generated: 14.52%
Net Profit If Called: -$1,114.00
Percent Return If Called: -18.62%
Annualized Return If Called: -9.95%
Days to Expiration: 683 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83 -
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29 - Expired
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54 - Closed
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11 -
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44 - Closed
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11 -
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04 - Closed
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11 -
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69 - Expired
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39 - Expired
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09 - Expired
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Continued Trade - STO 1 Jun07 40.00 Call @ 4.00 -
Position #2 Summary:
Stock Investment: $3,823.00
Income Generated: $585.00
Percent Income Generated: 14.91%
Net Profit If Called: $662.00
Percent Return If Called: 16.87%
Annualized Return If Called: 13.63%
Days to Expiration: 452 days
Trade History:
20-Mar-06 - Dollar Cost Averaging - BTO 100 KCI @ 39.23 -
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Interim Trade - STO 1 Jun07 40.00 Call @ 4.00 -
Since it's very likely that Position #2 will get called away at June expiration, resulting in a profit, I'll just let it get called away.
Position #1 needed to be adjusted to avoid assignment, which would result in a loss. So, I bought back the Jun07 40 call today for 10.21, since it was ITM with very little time value left. My plan says to roll out to a further month and up to a higher strike for a net credit. The problem was that there wasn't a higher further out strike selling for anywhere near 10.21. Normally the solution to this problem is to dollar cost average by buying an additional 100 shares of stock and selling 2 call options at 5.11 each or more. I always limit my positions to 5% or less of total capital. Doing a DCA would exceed this limit. However, since Position #2 is most likely to be called away at June expiration, I decided to temporarily exceed my 5% limit. So, I made the following adjustment:
23-May-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 40.00 Call @ -10.21 -
23-May-07 - Dollar Cost Averaging - BTO 100 KCI @ 49.87 -
23-May-07 - Combined Cost Basis - $10,970.00 200 @ 54.85 -
23-May-07 - Interim Trade - STO 2 Jan08 50.00 Call @ 6.20 -
Position #1 After Adjustment:
Stock Investment: $10,970.00
Income Generated: $1,088.50
Percent Income Generated: 9.92%
Net Profit If Called: $118.50
Percent Return If Called: 1.08%
Annualized Return If Called: 0.44%
Days to Expiration: 900 days
Trade History:
01-Aug-05 - Initial Stock Position - BTO 100 KCI @ 59.83 -
01-Aug-05 - Initial Call Option - STO 1 Aug05 60.00 Call @ 1.69 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 60.00 Call @ 1.29 - Expired
19-Sep-05 - Continued Trade - STO 1 Oct05 60.00 Call @ 0.54 - Closed
06-Oct-05 - Buy Back & Roll Out - BTC 1 Oct05 60.00 Call @ -0.11 -
25-Oct-05 - Continued Trade - STO 1 Nov05 60.00 Call @ 0.44 - Closed
28-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 60.00 Call @ -0.11 -
28-Oct-05 - Interim Trade - STO 1 Nov05 35.00 Call @ 2.04 - Closed
14-Nov-05 - Buy Back & Roll Out/Up - BTC 1 Nov05 35.00 Call @ -4.11 -
23-Nov-05 - Interim Trade - STO 1 Jan06 45.00 Call @ 0.69 - Expired
23-Jan-06 - Interim Trade - STO 1 Feb06 45.00 Call @ 0.39 - Expired
21-Feb-06 - Interim Trade - STO 1 Mar06 45.00 Call @ 0.09 - Expired
20-Mar-06 - Interim Trade - STO 1 Sep06 45.00 Call @ 4.59 - Expired
18-Sep-06 - Interim Trade - STO 1 Dec06 35.00 Call @ 0.94 - Closed
05-Dec-06 - Buy Back & Roll Out/Up - BTC 1 Dec06 35.00 Call @ -3.69 -
05-Dec-06 - Interim Trade - STO 1 Jun07 40.00 Call @ 4.00 - Closed
23-May-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 40.00 Call @ -10.21 -
23-May-07 - Dollar Cost Averaging - BTO 100 KCI @ 49.87 -
23-May-07 - Combined Cost Basis - $10,970.00 200 @ 54.85 -
23-May-07 - Interim Trade - STO 2 Jan08 50.00 Call @ 6.20 -
Now I could let this position get called away in Jan and end up with a very small profit or I may be able to continue with this position and get more profit out of it. Note that I've brought in almost 10% income during the holding period which has been reinvested into other positions.
This is not one of my better positions. I made a few mistakes along the way but I should still be able to get out with my initial investment and thereby preserve my capital. Some would say taking the loss and moving on to another position would be a better use of the funds, and they may be right, but who's to say that the next position would be any better. A primary goal of my trading plan is capital preservation so I do what I can to avoid losses.
Monday, May 21, 2007
WMT - Adjustment
The following adjustment was made today on WMT:
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 -
Current Position Summary:
Stock Investment: $4,926.00
Income Generated: $69.00
Percent Income Generated: 1.40%
Net Profit If Called: -$107.00
Percent Return If Called: -2.17%
Annualized Return If Called: -14.96%
Days to Expiration: 53 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WMT @ 49.26 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 52.50 Call @ 0.10 - Expired
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 -
Current Position Summary:
Stock Investment: $4,926.00
Income Generated: $69.00
Percent Income Generated: 1.40%
Net Profit If Called: -$107.00
Percent Return If Called: -2.17%
Annualized Return If Called: -14.96%
Days to Expiration: 53 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WMT @ 49.26 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 52.50 Call @ 0.10 - Expired
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
WGO - Adjustment
The following adjustment was made today on WGO:
21-May-07 - Continued Trade - STO 2 Jun07 35.00 Call @ 0.09 -
Current Position Summary:
Stock Investment: $6,455.00
Income Generated: $933.00
Percent Income Generated: 14.45%
Net Profit If Called: $1,478.00
Percent Return If Called: 22.90%
Annualized Return If Called: 12.01%
Days to Expiration: 696 days
Trade History:
19-Jul-05 - Initial Stock Position - BTO 100 WGO @ 34.92 -
19-Jul-05 - Initial Call Option - STO 1 Aug05 35.00 Call @ 1.09 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 35.00 Call @ 0.44 - Closed
01-Sep-05 - Buy Back & Roll Out - BTC 1 Sep05 35.00 Call @ -0.06 -
19-Sep-05 - Continued Trade - STO 1 Nov05 35.00 Call @ 0.34 - Closed
03-Oct-05 - Dividend Received - DIV 100 Dividend @ 0.09 -
21-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 35.00 Call @ -0.06 -
24-Oct-05 - Interim Trade - STO 1 Nov05 30.00 Call @ 0.24 - Closed
14-Nov-05 - Buy Back & Roll Up - BTC 1 Nov05 30.00 Call @ -2.66 -
21-Nov-05 - Continued Trade - STO 1 Jan06 35.00 Call @ 0.99 - Expired
09-Jan-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
23-Jan-06 - Continued Trade - STO 1 Mar06 35.00 Call @ 0.44 - Expired
20-Mar-06 - Dollar Cost Averaging - BTO 100 WGO @ 29.63 -
20-Mar-06 - Combined Cost Basis - $6,455.00 200 @ 32.28 -
20-Mar-06 - Continued Trade - STO 2 Jul05 35.00 Call @ 0.69 - Expired
03-Apr-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
10-Jul-06 - Dividend Received - DIV 200 Dividend @ 0.09 -
24-Jul-06 - Continued Trade - STO 2 Jan07 35.00 Call @ 1.39 - Closed
09-Oct-06 - Dividend Received - DIV 200 Dividend @ 0.10 -
22-Dec-06 - Buy Back & Roll Out - BTC 2 Jan07 35.00 Call @ -0.16 -
22-Dec-06 - Continued Trade - STO 2 Apr07 35.00 Call @ 1.19 - Expired
08-Jan-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
09-Apr-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
23-Apr-07 - Continued Trade - STO 2 May07 35.00 Call @ 0.54 - Expired
21-May-07 - Continued Trade - STO 2 Jun07 35.00 Call @ 0.09 -
21-May-07 - Continued Trade - STO 2 Jun07 35.00 Call @ 0.09 -
Current Position Summary:
Stock Investment: $6,455.00
Income Generated: $933.00
Percent Income Generated: 14.45%
Net Profit If Called: $1,478.00
Percent Return If Called: 22.90%
Annualized Return If Called: 12.01%
Days to Expiration: 696 days
Trade History:
19-Jul-05 - Initial Stock Position - BTO 100 WGO @ 34.92 -
19-Jul-05 - Initial Call Option - STO 1 Aug05 35.00 Call @ 1.09 - Expired
22-Aug-05 - Continued Trade - STO 1 Sep05 35.00 Call @ 0.44 - Closed
01-Sep-05 - Buy Back & Roll Out - BTC 1 Sep05 35.00 Call @ -0.06 -
19-Sep-05 - Continued Trade - STO 1 Nov05 35.00 Call @ 0.34 - Closed
03-Oct-05 - Dividend Received - DIV 100 Dividend @ 0.09 -
21-Oct-05 - Buy Back & Roll Down - BTC 1 Nov05 35.00 Call @ -0.06 -
24-Oct-05 - Interim Trade - STO 1 Nov05 30.00 Call @ 0.24 - Closed
14-Nov-05 - Buy Back & Roll Up - BTC 1 Nov05 30.00 Call @ -2.66 -
21-Nov-05 - Continued Trade - STO 1 Jan06 35.00 Call @ 0.99 - Expired
09-Jan-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
23-Jan-06 - Continued Trade - STO 1 Mar06 35.00 Call @ 0.44 - Expired
20-Mar-06 - Dollar Cost Averaging - BTO 100 WGO @ 29.63 -
20-Mar-06 - Combined Cost Basis - $6,455.00 200 @ 32.28 -
20-Mar-06 - Continued Trade - STO 2 Jul05 35.00 Call @ 0.69 - Expired
03-Apr-06 - Dividend Received - DIV 100 Dividend @ 0.09 -
10-Jul-06 - Dividend Received - DIV 200 Dividend @ 0.09 -
24-Jul-06 - Continued Trade - STO 2 Jan07 35.00 Call @ 1.39 - Closed
09-Oct-06 - Dividend Received - DIV 200 Dividend @ 0.10 -
22-Dec-06 - Buy Back & Roll Out - BTC 2 Jan07 35.00 Call @ -0.16 -
22-Dec-06 - Continued Trade - STO 2 Apr07 35.00 Call @ 1.19 - Expired
08-Jan-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
09-Apr-07 - Dividend Received - DIV 200 Dividend @ 0.10 -
23-Apr-07 - Continued Trade - STO 2 May07 35.00 Call @ 0.54 - Expired
21-May-07 - Continued Trade - STO 2 Jun07 35.00 Call @ 0.09 -
WFMI - Adjustment
The following adjustment was made today on WFMI:
21-May-07 - Interim Trade - STO 1 Jul07 45.00 Call @ 0.24 -
Current Position Summary:
Stock Investment: $4,719.00
Income Generated: $107.00
Percent Income Generated: 2.27%
Net Profit If Called: -$112.00
Percent Return If Called: -2.37%
Annualized Return If Called: -9.84%
Days to Expiration: 88 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WFMI @ 47.19 - VICC
23-Apr-07 - Initial Call Option - STO 1 May07 50.00 Call @ 0.83 - Expired
21-May-07 - Interim Trade - STO 1 Jul07 45.00 Call @ 0.24 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
21-May-07 - Interim Trade - STO 1 Jul07 45.00 Call @ 0.24 -
Current Position Summary:
Stock Investment: $4,719.00
Income Generated: $107.00
Percent Income Generated: 2.27%
Net Profit If Called: -$112.00
Percent Return If Called: -2.37%
Annualized Return If Called: -9.84%
Days to Expiration: 88 days
Trade History:
23-Apr-07 - Initial Stock Position - BTO 100 WFMI @ 47.19 - VICC
23-Apr-07 - Initial Call Option - STO 1 May07 50.00 Call @ 0.83 - Expired
21-May-07 - Interim Trade - STO 1 Jul07 45.00 Call @ 0.24 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
UPS - Adjustment
The following adjustment was made today on UPS:
21-May-07 - Continued Trade - STO 1 Jul07 75.00 Call @ 0.39 -
Current Position Summary:
Stock Investment: $7,193.00
Income Generated: $49.00
Percent Income Generated: 0.68%
Net Profit If Called: $356.00
Percent Return If Called: 4.95%
Annualized Return If Called: 21.25%
Days to Expiration: 85 days
Trade History:
26-Apr-07 - Initial Stock Position - BTO 100 UPS @ 71.93 - VICC
26-Apr-07 - Continued Trade - STO 1 May07 75.00 Call @ 0.10 - Expired
21-May-07 - Continued Trade - STO 1 Jul07 75.00 Call @ 0.39 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
21-May-07 - Continued Trade - STO 1 Jul07 75.00 Call @ 0.39 -
Current Position Summary:
Stock Investment: $7,193.00
Income Generated: $49.00
Percent Income Generated: 0.68%
Net Profit If Called: $356.00
Percent Return If Called: 4.95%
Annualized Return If Called: 21.25%
Days to Expiration: 85 days
Trade History:
26-Apr-07 - Initial Stock Position - BTO 100 UPS @ 71.93 - VICC
26-Apr-07 - Continued Trade - STO 1 May07 75.00 Call @ 0.10 - Expired
21-May-07 - Continued Trade - STO 1 Jul07 75.00 Call @ 0.39 -
Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.
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