Results for Week Ending December 14, 2012

Hey Fellow Traders,

This week we go back to a stock we haven’t used much recently – Priceline.com (PCLN).  For quite a period of time the premium just hasn’t been there with PCLN.  Other items on our list, particularly GLD and AAPL lately have been where the premium has been.  This week GLD was still there for premium, but I just couldn’t get the signals to make the buy (there were some signals that I didn’t see until Thursday evening – more on this later).  AAPL has lost much of its’ premium luster with the dramatic drop in price. 

MAX10 update! – Last week was week 10, the last week.  The classes were tough, but now instead of being totally gassed like I was during the first round, I am now just a little winded.  This time around I really didn’t lose any inches, but my endurance has gone way up, my legs are getting stronger – I can actually run a few laps around the track again.  Thanks to my arthritis I had been relegated to the elliptical for years.  I did hit a new personal record of 72 pushups in a minute and came close to my situp record.  I am taking the next week off from MAX10 to let the body recharge.  I have my body fat analysis next week, I am hoping to be at 20% or less.

We are in the midst of lots of kid Christmas programs and friend’s programs.  Lots of great music and holiday cheer.  Eldest daughter is doing well, the USAF is doing well and she is blossoming into a fine young woman.  Boy is doing well and youngest girl is happy the Christmas is almost here.  We have a short week coming up before the holiday with the kids in school then off to the holiday fun!!!

Now on to the analysis:

ANALYSIS

 

Here is the trade:

PCLN    630     Call     $0.68

PCLN    635     Call    ($0.35)     This gave a $0.33 Net Credit for a 6.8% ROI

Total ROI for the week = 4.25% because we used $500 spreads so we double the spread ROI to get our total ROI.

Let us go through our process to see how we arrived at the call spread.

1.       For the past two weeks the overall price trend for PCLNT has been down so we are looking call spread.

2.      Among the eligible trades on our list of approved stocks/indexes/ETFs PCLN, AAPL, and GLD were the only ones that had ROI that were acceptable.

3.      GLD looked good, but couldn’t get current signals to go our way.  AAPL has lost its premium mojo with the recent dramatic price decline.  That left PCLN.

4.      Now moving up the Call side of the option chain we arrive at the 630/635 trade when we got

a.      92.3% probability of success

b.      6.6% Net ROI

5.      The brown lines show the trade.

6.      The circles show a new signal that we are looking at incorporating into the model.  The circles show where the price hit the upper Bollinger Band then retreated downward.  I am working on a full treatment of this mid-week.

PAPER TRADE

No Paper Trades this week. 

COVERED CALLS

We still have our covered calls on Vivus.

                                               

Symbol    Company       Stock     Option      Premium        Initial        Annualized

VVUS       Vivus               11.48      Dec13           .26       2,676.00          11.65%*

* Changed this calculation from using the stock price at call option sell to using the initial investment.

VVUS – We are riding the downward side of this speculation play.  We are making ok money each month, but we need to eventually get back some of the initial outlay.  When VVUS rebounds on its next drug announcement we will probably look to sell out.        

DIVIDEND STOCKS

Here is our Dividend Stock Portfolio:

Ticker Name                            Buy       Current      Date                Div

                                                  Price      Price                                  Yield  

 KO     Coke                             38.17      37.66       08/27/2012          2.71%

AGD   Alpine Global Dynamic     5.76       5.22        08/27/2012        12.18%

AOD   Alpine Total Dynamic       4.37       4.07        08/27/2012        14.80%

MO      Altria                            34.26      33.16       08/27/2012          5.17%

INTC   Intel                              22.87      20.53       10/01/2012          3.94%

HIX    Western Asset Hi Inc II  10.53        9.80      10/15/2012          9.44%         

MCD   McDonald’s                  91.74      88.88      10/30/2012          3.55%

MSFT  Microsoft                      28.55      26.81      10/30/2012          3.12%

JNJ      Johnson and Johnson     68.03      70.69      11/23/2012          3.53%

Current Prices as of 12/14/2012 Closing Price

The portfolio is still down as the overall market drop after the Presidential election.  We are starting to sound like a broken record as this is this lower price will give us a dividend reinvestment opportunity at lower prices.  AGD, AOD and HIX are Closed End Funds that pay monthly dividends.  With dividend reinvestment this means that these positions will increase and I will be able to get more shares with the depressed prices.  If you are not reinvesting dividends then you are still accumulating cash to buy the next batch of stock at the rate you signed on for so you should be happy as well.  Or you can now buy more stock with the dividends already accumulated.  This is a good case all around. 

Each of these stocks carries a 15% stop on them, and we are nowhere near that on any of these stocks.  If 100 shares in each stock is held that will generate $1,254 in dividend revenue assuming no reinvestment.  This gives a 4.12% return.  This is a pretty good return in this market and it is very safe.  This portfolio is made up exclusively with Blue Chips and Closed End Funds that are diversified in sectors and globally.  If reinvestment is used that number goes even higher.

I have developed a watchlist for this Portfolio.  These are stocks that basically meet the criteria we have: (1) a moat business model, (2) dividend of at least 3%, (3) solid fundamental analysis numbers.  Here is our watchlist:

                                                                       

Ticker                                     Recent         Date         Div            Target

                    Name                   Price                            Yield          Price      

PG       Proctor and Gamble         69.93  09/21/2012       3.27%         66.00

PG – Buying on the next dip below $66

QUESTIONS

Where have you been the past couple of weeks?  I REALLY missed your analysis and tracking of options and dividend portfolio.

First, I must apologize for my absence.  I wish I could say it was some noble thing like saving a village in Africa or donating a organ to save someone.  But it is much more mundane.  I had some family issues that took me away from this blog.  Hopefully all that is behind me now and I can get back to a more regular rhythm in these blob posts.  My goal is to have this be a weekly and sometimes more posting.  The New Year is coming up and that is one of my resolutions.

Why do you stick with VVUS?  This is dragging down your overall performance a lot!  I understand that sometimes you want a speculation play, but this seems to be a dog.  What gives?

Good question.  I am sticking with VVUS primarily because a look at the long term chart shows lots of ups and downs in this stock.  Right now we are in a down trough.  But we will be getting into a up trend soon enough.  AS we ride that down trend out we are getting good option premium.  Now of course I could be wrong on this and VVUS could never have another drug out there again, but I doubt it.  They are in end stage trials on several drugs and the drugs they do have out are gaining acceptance.  If you are a little more faint of heart then a stock like Celgene (CELG) or Gilead Sciences (GILD) would be a good fit.  Both are fast growing and still a little on the speculative side.  If you are a fan of Jim Cramer he is a big GILD fan.

Do you use the covered call strategy on your Dividend Portfolio?  It seems this would be a great way to boost the revenue and returns on this portfolio?

I am seriously thinking about using the covered call strategy on part or all of the Dividend Portfolio.  Right now the main inhibitor is cost as we have 100 shares (called round lots) of each stock.  This amounts to 1 option contract.  So for each stock we would have only one option contract available. That is what drives the cost into being prohibitive.  As we accumulate shares and can do more than one contract then the covered call strategy would fall into line cost wise.  I am working on getting a dividend portfolio that is dollar weighted – meaning that we will spend approximately the same amount of money on each stock instead of having the same amount of shares.  The option premium is low right now as we as a nation await the resolution to the fiscal cliff.  So currently there are no options that meet our criteria on a monthly basis for the Dividend Portfolio.

 

DISCLAIMER:  Hashley Capital Management, LLC; as well as I are not giving any trading advice.  All data is historical in nature and is intended for use as an educational tool.  Trading in stocks and/or options is risky and can result in loss of capital. Stocks and options carry inherent risks and should be well researched before any buy/sell decision is made.   There is no attempt to sell any brokerage services or act as a broker or dealer by Hashley Capital Management, LLC.  Any forward looking comments on this blog are not attempts to solicit business for Hashley Capital Management, LLC and are the opinion of Hashley Capital Management only.  If you choose to follow the same path and invest in the strategies and trades used by Hashley Capital Management, LLC after doing your own due diligence, that is your decision and yours alone. 

Reach me @:

Email:  hashleycm@yahoo.com

Twitter: @awagel01

Stocktwits:  awagel01

Or leave a comment on the blog

TTFN

Ash

Results for week of November 16 2012

Hey all,

This week we go back to an old standby.  AAPL has been great to us.  After a couple of weeks moving away from AAPL due to low premium, we got back on that horse.  AAPL is starting to show premium life.  This leads me to believe that the slide is close to over.  I had predicted that AAPL would fall to $500, but it looks like we might be a little low on that.  It looks like $525 might be the low point.  This is still a very fundamentally strong company.  Cash flow is great, the maps disaster is being dealt with (Google has put out an app that AAPL is letting in their app store that basically puts the old map app back on the iPhone), iTunes store and App Store are going like gangbusters.  The selloff I feel is the result of the great run up in price AAPL has seen this year.  If you bought AAPL a year ago today you would still see a 52% appreciation in stock price EVEN AFTER the selloff.  This is my opinion why the selloff has occurred – folk who own lots of shares of AAPL are selling off before all the tax hikes hit at the beginning of the New Year, locking in capital gains at the low rate of 15% currently in effect.

GLD, the pick for the past few weeks just didn’t have the premium this week.  If I were to put on a third spread last week, I would have gone to GLD, but happily I didn’t have to be in that position.

Ok, here is my weekly MAX10 commercial—just kidding, they don’t pay me anything for these testimonials.  Finished week 7 and am really starting to feel good.  During the first session I was struggling mightily at this stage and had to take some breaks.  This time around I have not had to take any breaks.  The workouts are still challenging and I am seeing some big differences in the body composition.  I am not losing the weight that I did the first time around, only about 5 lbs. this time, but the muscle definition is much better now.

Kids are doing well – all three of them.  Noting much went on this week with them.  I guess going into the Thanksgiving holiday there is a little lull.  The kids only have a couple of days this week.  I remember when we had to go Mon-Wed on Thanksgiving week.  Lucky kids!!!

Now on to the analysis:

ANALYSIS

Here is the trade:

AAPL    545     Call     $1.08

AAPL    550     Call    ($0.59)     This gave a $0.49 Net Credit for a 4.9% ROI

AAPL    555     Call     $0.48

AAPL    560     Call    ($0.12)        This gave a $0.36 Net Credit for a 3.6% ROI

Total ROI for the week = 4.25% - Remember – we equally distribute assets among trades

Yes, we did another ladder trade.  I really like these types of trades.  We start with our normal trade hitting our parameters.  Then we will go farther up the chain for calls and further down the chain for puts to still meet our ROI requirement. 

We will analyze the 545/550 trade since the 555/560 trade will be even better except for ROI.  The chart above shows the trade in pictorial form.

1.       The overall trend since the election has been down so we are looking call spread.

2.      Among the eligible trades on our list of approved stocks/indexes/ETFs AAPL and GLD were the only ones that had ROI that were acceptable.

3.      GLD was bucking the overall market trend, but AAPL was following the market trend.  Also the premiums on AAPL were better than what GLD was offering, so we went with AAPL

4.      Now moving up the Call side of the option chain we arrive at the 545/550 trade when we got

a.      91.05% probability of success

b.      4.9% Net ROI

5.      The White lines show the 545/550 trade and the brown lines show the 555/560 trade.

6.      The first yellow vertical line show when we entered the trade and the second vertical yellow line show the price at expiration.

PAPER TRADE

No Paper Trades this week. 

COVERED CALLS

We have been doing covered calls on Vivus and McDonald’s.  We are continuing with these two stocks in our covered call adventure.

                                               

Symbol    Company       Stock     Option       Premium       Initial        Annualized

VVUS       Vivus               10.33      Dec13           .26        2,676.00          11.65%*

* Changed this calculation from using the stock price at call option sell to using the initial investment.

VVUS – Well, we were wrong on our prediction – the support line was blown away.  This was because VVUS wasn’t the first to market with a hepatitis C drug.  When they got beat in this race.  Remember this is a speculation play so we are taking lots of risk with it.  The drug they have out – weight loss drug Qysmia.  The drug is out on the market, but kind of limited – you can only get it through mail order pharmacies right now.  It is expensive and insurance companies are hemming and hawing to pay for it.  They lost the race for being first getting a Hep C drug out.  But VVUS does have some other good drugs in the pipeline and they will have a Hep C drug out as well.  My patience is starting to wane, but still there with this stock.      

DIVIDEND STOCKS

Here is our Dividend Stock Portfolio:

Ticker Name                              Buy   Current      Date              Div

                                                    Price   Price                               Yield  

 KO     Coke                                 38.17      37.22   08/27/2012     2.71%

AGD   Alpine Global Dynamic         5.76        5.19    08/27/2012   12.18%

AOD   Alpine Total Dynamic           4.37        4.09    08/27/2012   14.80%

MO      Altria                                 34.26      32.18    08/27/2012     5.17%

INTC   Intel                                   22.87      20.21    10/01/2012     3.94%

HIX    Western Asset Hi Inc II       10.53        9.78    10/15/2012     9.44%         

MCD   McDonald’s                       91.74      84.12    10/30/2012     3.55%

MSFT  Microsoft                           28.55      26.52    10/30/2012     3.12%

Current Prices as of 11/16/2012 Closing Price

The portfolio is down as is the entire market after the Presidential election.  For me this is a winning situation.  AGD, AOD and HIX are Closed End Funds that pay monthly dividends.  With dividend reinvestment this means that these positions will increase and I will be able to get more shares with the depressed prices.  If you are not reinvesting dividends then you are still accumulating cash to buy the next batch of stock at the rate you signed on for so you should be happy as well.  Or you can now buy more stock with the dividends already accumulated.  This is a good case all around. 

Each of these stocks carries a 15% stop on them, and we are nowhere near that on any of these stocks.  If 100 shares in each stock is held that will generate $416 in dividend revenue assuming no reinvestment.  This gives a 5.10% return.  This is a pretty good return in this market and it is very safe.  This portfolio is made up exclusively with Blue Chips and Closed End Funds that are diversified in sectors and globally.  If reinvestment is used that number goes even higher.

I have developed a watchlist for this Portfolio.  These are stocks that basically meet the criteria we have: (1) a moat business model, (2) dividend of at least 3%, (3) solid fundamental analysis numbers.  Here is our watchlist:

                                                                       

Ticker                                   Recent       Date                        Div         Target

                  Name                     Price                                         Yield         Price

PG       Proctor and Gamble         66.82          09/21/2012           3.27%         66.00

JNJ      Johnson & Johnson          69.19          09/21/2012           3.56%         68.00  

JNJ – Buying on the next dip below $68

PG – Buying on the next dip below $66

QUESTIONS

None at this time

 

DISCLAIMER:  Hashley Capital Management, LLC; as well as I are not giving any trading advice.  All data is historical in nature and is intended for use as an educational tool.  Trading in stocks and/or options is risky and can result in loss of capital. Stocks as well carry inherent risks and should be well researched before any buy decision is made.   There is no attempt to sell any brokerage services or act as a broker or dealer by Hashley Capital Management, LLC.  Any forward looking comments on this blog are not attempts to solicit business for Hashley Capital Management, LLC and are the opinion of Hashley Capital Management only.  If you choose to follow the same path and invest in the strategies and trades used by Hashley Capital Management, LLC after doing your own due diligence, that is your decision and yours alone. 

Reach me @:

Email:  hashleycm@yahoo.com

Twitter: @awagel01

Stocktwits:  awagel01

Or leave a comment on the blog

TTFN

Ash

Results for Week November 02, 2012

Hey all!

Ok, earnings season is now for the most part over…thank goodness!!!  It was a strange time.  Most companies had already lowered expectations for this quarter and/or the rest of the year.  So earnings were down from a year ago, but for some notable exceptions – AAPL is a prime example – did ok. 

AAPL once again offered an enticing target.  The slide continued and I briefly thought of buying some puts.  But that is not my system so I shied away.  Good thing I didn’t buy any puts this week, because the price action was such that I would have been lucky to break even. 

Option premiums have been tightening on both sides of the option chain.  Finding a suitable spread to enter was extremely difficult this week.  The market closing due to Hurricane Sandy made the window to enter trades very small.  The option chains reacted swiftly to the compressed time frame. 

GLD was our pick again this week.  The premium in GLD is still holding and the ETF itself is still trading in a range bound manner.  This was like our safety blanket in this very volatile week.

I completed week 5 of MAX10 this week.  The workouts are getting harder as we are now half way through the 10 week program.  But this time around I can finish most of them, where last time around I was having to stop and rest part of the way through the workouts multiple times.  I am not losing as much weight as I did last time, but I can really see the effects of the bodyshaping.  I feel better – the arthritis in my legs has more down days and I feel better in general.  The one area I need to work on more is the eating portion.  I eat pretty healthy already, but there is definitely room for improvement.  I encourage all of you to find a program like MAX10.  My concentration is better when I am working on trades, my health is better and I have less stress with the daily workouts.  It is a sorry cliché, but health is the most important thing and a healthy lifestyle only adds to the years you get to enjoy your life with your friends and family.

 The two youngest get back to school Monday.  The second marking period gets under way with a bang as both kids have projects due soon.  Little girl is now done with volleyball, but tumbling is going.  Middle child has a drama production coming up at the end of the week – Nov 9 & 10.  I always like the drama productions, the kids do so well and I am constantly amazed at how much they do with so little resources. 

Eldest daughter is settling into her duty station.  She gets to be a line cook for her first stop.  She is in the middle of nowhere, but is adjusting.  I guess they have lots of stuff to do on the base.    

Ok, let’s get on with the analysis:

ANALYSIS

Here is the trade:

GLD    167.50     Call     $0.155

GLD    168.50     Call    ($0.095)     This gave a $0.060 Net Credit for a 6.0% ROI

GLD    169.00     Call     $0.10

GLD    170.00     Call    ($0.06)       This gave a $0.04 Net Credit for a 4.0% ROI

Total ROI for the week = 5.00% - Remember – we equally distribute assets among trades

We actually did this exact same trade last week.  This is a ladder trade and worked out well for us again this week.  This is a great way to earn some premium as the second ladder is above the trade that we put on that passes the tests established.  The only requirement that we need to concern ourselves with on the second trade is trying to meet the ROI test.  As you can see we did that here.    

PAPER TRADE

No paper trades this week

COVERED CALLS

We currently are only doing covered calls on Vivus.  I am searching for another opportunity to add to the Covered Call Portfolio.                                     

Symbol      Company       Stock     Option       Option           Initial             Annualized

VVUS        Vivus           14.33      Nov 23         .41             2,676.00          18.38%*

* Changed this calculation from using the stock price at call option sell to using the initial investment.

VVUS – Well, we broke through resistance and it looks like we are heading for a long term resistance line of $10.00  This is a weird time, VVUS main product is showing increasing market penetration, but the stock slid almost 5%.  I am still sticking with this stock for now, but am scouring the internet and the VVUS website for any sign of bad news.  There is something going on here as the stock is sliding, but I cannot find what it is.  I am looking to buy back the covered call we have out there and get into either a $18 or $19 strike call.  This would give us an extra  $13-$20 for each call sold.  The basic fundamentals of the stock have not changed, but something in the market outlook has. This is why we are staying with it.        

DIVIDEND STOCKS

Here is our Dividend Stock Portfolio:

Ticker Name                                      Buy      Current      Date                Div

                                                           Price       Price                               Yield  

 KO     Coke                                       38.17      37.08      08/27/2012       2.71%

AGD   Alpine Global Dynamic               5.76        5.71      08/27/201       12.18%

AOD   Alpine Total Dynamic                 4.37        4.25      08/27/2012      14.80%

MO      Altria                                       34.26     31.70      08/27/2012        5.17%

INTC   Intel                                         22.87     22.06       10/01/2012        3.94%

HIX    Western Asset Hi Income II   10.53     10.17       10/15/2012        9.44%         

MCD   McDonald’s                             91.74     86.86       10/30/2012        3.55%

MSFT  Microsoft                                  28.55     29.50      10/30/2012        3.12%

Current Prices as of 11/02/2012 Closing Price

Each of these stocks carries a 15% stop on them, and we are nowhere near that on any of these stocks.  This portfolio is made up of 100 shares in each stock and will generate $1,020 in dividend revenue per year assuming no reinvestment.  This gives a 4.48% return.  This is a pretty good return in this market and it is very safe.  Five Blue Chips and three funds that are diversified in sectors and globally.  If reinvestment is used that number goes even higher.

I have developed a watchlist for this Portfolio.  These are stocks that basically meet the criteria we have: (1) a moat business model, (2) dividend of at least 3%, (3) solid fundamental analysis numbers.  Here is our watchlist:

                                                                       

Ticker Name                  Recent Price       Date                  Div Yield        Target Price

PG       Proctor and Gamble         69.19          09/21/2012           3.27%         67.50

JNJ      Johnson & Johnson          70.90          09/21/2012           3.56%         65.00  

MSFT – I picked this up on All Hallows Eve and it is now part of the Dividend Portfolio

JNJ – Still waiting!!!

PG – I have raised the target price to $67.50.  The fundamentals still look good there and it looks like we are in a relative crevasse pattern – there are two and it looks like we may developing a third.  This is a neutral range bound pattern.  If this holds I will buy at the low end of the pattern which is $67.50

QUESTIONS

Why have you limited yourself to the list of approved Stocks/ETFs/Indexes?  There are tons of weekly options available.

Good question.  I developed the list basically as a time saver.  Yes there are tons of weekly options available.  BUT most of them do not have the premium I need to make a worthy spread trade.  Remember, weekly options were developed originally as a hedging tool.  So you will see tons of ITM or just OTM options, but very few chances for getting premium like I do. 

Periodically I will go through the list to see if there are any others that I might add, but so far none have passed muster.  If there is I will let all you guys know.

If you want to see the complete list of weekly options available here is a link:

www.cboe.com/micro/weeklys/availableweeklys.aspx

 

DISCLAIMER:  Hashley Capital Management, LLC; as well as I are not giving any trading advice.  All data is historical in nature and is intended for use as an educational tool.  Trading in stocks and/or options is risky and can result in loss of capital. Stocks as well carry inherent risks and should be well researched before any buy decision is made.   There is no attempt to sell any brokerage services or act as a broker or dealer by Hashley Capital Management, LLC.  Any forward looking comments on this blog are not attempts to solicit business for Hashley Capital Management, LLC and are the opinion of Hashley Capital Management only.  If you choose to follow the same path and invest in the strategies and trades used by Hashley Capital Management, LLC after doing your own due diligence, that is your decision and yours alone. 

Reach me @:

Email:  hashleycm@yahoo.com

Twitter: @awagel01

Stocktwits:  awagel01

Or leave a comment on the blog

TTFN

Ash