TBT - Open Position


Written on January 7, 2009 – 1:28 pm | by admin

I opened a position in TBT today.  Its an ultra short of Lehman 20 year treasuries.  This falls below my 20% annual threshold but this is a position that I am willing to hold on to because bond yields won’t go much lower than what they were a month ago (negative yield for 3 month t-bill).  I am also going to try and hold onto this position as I see good upside as the market starts to turn a corner.  I guess I am going to have to work on my rolling up and out skills with this position.

Buy: 100 @ $42.495 ($7 commission)
Initial Investment: $4256.50
Sold: $42 strike @ $1.40 ( $8.25 commission)
Net Investment: $4124.75
Expected Return: 1.41%

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UYG - Position Update


Written on January 6, 2009 – 2:49 pm | by admin

Today I had my first decision on whether to sell the near month option or go out to February.  I currently hold 200 UYG.  If I were to sell the Jan $7 for $0.15 I make nearly nothing after commissions.  If I sell the Jan $6 and get called, I would be at a loss on the position and I would also have to manage rolling up and out.  I could sell the Feb $7 for $0.55.  

In the end, I chose to sell the Feb $7s for three reasons.  I can increase my expected annual return.  I am not convinced this market will not be lower at the end of Feb and if I sold any Jan calls, I would lose the exuberant feeling (and upside premium) going around wallstreet right now.  I also don’t fully trust my rolling up and out skills yet.  I will track my UYG position on paper as if I had sold the Jan $6 and see what happens.  But for now, I will take the easy way and sell the Febs and if I have to roll it to Mar $8s, I will.  

Purchased: 200 @ $8.01
Initial Option Income: $1.20
Feb Option Income: $0.55
Other Option Income: $0.40
Expected Return: 12.73% 
Expected Hold Time: 4 option cycles 

 

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Posted in Lessons, Rick Position - Update | 1 Comment »

SSO - Position Update


Written on January 6, 2009 – 12:41 pm | by admin

Today I sold 2 Jan $30 strike contracts on two of my three SSO positions.  I should have done it this morning but it never got to my limit so I sold it while the premiums were still decent.

Position 1:
Purchased: 100 @ 33.85
Initial Option Income: $5.30
Jan Option Income: $0.45
Other Option Income: $0.60
Expected Return: 7.22% 

Position 2:
Purchased: 100 @ 31.28
Initial Option Income: $3.10
Jan Option Income: $0.45
Other Option Income: $0.60
Expected Return: 8.88% 

I also sold a Jan $29 strike a few days ago (forgot about this one).  This is one where I will use the roll up and out method should it get above the $29 strike.
Purchased: 100 @ 30.55
Initial Option Income: $1.95
Jan Option Income: $0.50
Other Option Income: $.50
Expected Return: 3.38%

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Cash and Hedging


Written on January 6, 2009 – 12:13 pm | by admin

I am still skeptical of this rally and the fact that things are better.  I still don’t see any help for housing or the consumer that is upside-down on their house (not that there should be any).  Until there is a housing fix or another earth-shattering plan, I am going to keep more cash on hand than normal (20-30%).

 I have also taken a portion of my money and purchased some long dated S&P puts to help hedge to the downside.  I am currently hedged with 3-4% of my overall portfolio and if we blast higher from here, I may look to add another 3% or so to that.  While 6-7% isn’t a big hedge, it could pay off if volatility makes a comeback sometime during the first half of the year.

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Posted in Lessons, Trading | 1 Comment »

EEM - Open Position


Written on January 6, 2009 – 12:01 pm | by admin

I opened a position in EEM a few minutes ago.  While I am skeptical of this rally, I think it can hold until Obama actually obtains the title of President.  If it doesn’t, I’m willing to have some international exposure in my portfolio.  

Buy: 100 @ $27.10 ($7 commission)
Initial Investment: $2717
Sold: $27 strike @ $1.08 ( $8.25 commission)
Net Investment: $2617.25
Expected Return: 2.51%

 

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SSO - Close Position


Written on January 5, 2009 – 10:41 am | by admin

I have decided to close one of my four SSO positions.  There are a couple reasons for doing this:

  1. I can close it at a profit
  2. I believe we will go down again
  3. SSO is too large a position
  4. Its leveraged (see above)

I will give you the details of the overall transaction.  I am showing you the details of a position that will yield a profit.  I am not using a FIFO/FILO method to this.

Buy: 100 @ $28 ($7 commission)
Net Investment: $2625.58
Sold Nov08 $30 @ $1.85 ($3.58 commission)
Sold Dec08 $30 @ $0.60 ($3.58 commission)
Received Dividend of $0.05911 
Sold: 100 @ 28.21 ($7 commission) 

Return: 9.36% over 2 option periods (71% annually)

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Posted in Rick Position - Closed | No Comments »

AA - Open Position


Written on January 5, 2009 – 9:00 am | by admin

Today I opened a position in AA. I entered the buy/write transaction on Friday and didn’t get filled.  I got filled this morning.  The details:

Buy: 200 @ $11.67 ($0 commission)
Initial Investment: $2334
Sold: $10 strike @ $1.95 ( $5.50 commission)
Net Investment: $1949.50
Expected Return: 2.30%

I am ok with holding this for a while as I don’t see the largest Aluminum producer going out of business.  They also have a $0.17 dividend next month (or 1.74% on my cost basis)  should I still hang on to it.  

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USO - Open Position


Written on January 2, 2009 – 12:51 pm | by admin

Today I opened a position in USO.  I got involved in this last month and am going to take the plunge again.  The details:

Buy: 100 @ $33.15 ($0 commission)
Initial Investment: $3315
Sold: $28 strike @ $5.80 ( $5 commission)
Net Investment: $2740
Expected Return: 2.00%

I am ok with holding this etf for a while.  I think there will be good premiums on this one because people will keep trying to find the bottom and 

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Posted in Rick Position - New | 2 Comments »

GE - Open Position


Written on December 23, 2008 – 2:23 pm | by admin

Today I opened a 300 share position in GE (General Electric).  I did this in two transactions because I blanked and only set my order to 1 contract instead of 3 so I went back and bought another 2.  The second 200 were at a better price so it helps numb the pain of double commissions.  I just found the “covered call” transaction option at Zecco so my commission prices will be estimates for now.  Tomorrow I can update it with more accurate numbers.

Position 1:
Buy: 100 @ $16.31($0 commission)
Initial Investment: $1631.00
Sold: $15 strike @ $1.53 ( $5 commission)
Net Investment: $1483
Dividend: $0.31
Expected Return: 2.92% (0.84% if called before ex-dividend) 

Position 2:
Buy: 200@ $16.27($0 commission)
Initial Investment: $3254.00
Sold: $15 strike @ $1.53 ( $5 commission)
Net Investment: $2953.50
Dividend: $0.31
Expected Return: 3.52% (1.42% if called before ex-dividend) 

Now for my reasoning behind entering this position.  I am fully expecting to get taken out of this position tonight.  That is fine with me.  I will take my 1%+ and start fresh tomorrow.  Should I not get taken out, I will exit my position in GE in the morning.  I am willing to eat a debit on the premium to get the $0.31 dividend.  Getting the dividend and getting out near breakeven on exiting the position, I should just about double my before ex-dividend returns.  We should know in the morning.  Has anyone tried this before?

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MO - Open Position


Written on December 20, 2008 – 10:30 pm | by admin

I opened up a position in MO (Altria Group) this past Thursday (sorry for the late update).  I sold the Jan $14.  I am very concerned with how the market will react once the year changes and so I wanted a rather defensive position to start me off.  It is also yielding an 8% dividend so if I have to hold it for a while, I have some extra income.

Since I sold an ITM option, there is a good chance that I don’t get the dividend.  However, since I am establishing this position in Zecco, my commission costs will only be $10 and getting called before the dividend will yield me $6.  If I were to calculate the annual return for a position that yields .43% every 2 days, it would be over 100% annually.  Not too shabby.

Buy: 100 @ $14.95($0 commission)
Initial Investment: $1495
Sold: $14 strike @ $1.11 ( $5 commission)
Net Investment: $13.89
Dividend: $0.32
Expected Return: 2.73% (0.43% if called before ex-dividend)

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