Hello fellow traders,
I realize I have been away for a while. Had a few rough things to deal with: GLD hit me hard with the down trend, my arthritis kicked back up in a bad way and my computer has been glitching in a bad way.
The first one: GLD when it went down it went hard and blew through my spread in the pre-market so I got hammered. Was looking to make 3.87% and ended up losing 90%. This is not the way I want to trade. But on the good side since the drop I have been able to recoup some of the loss.
The arthritis thing is just a pain – literally and very physically. I have a sneaking suspicion that it is a little stress related from the recent GLD debacle, but I wish it would quit NOW!
My computer is starting to say that the battery is bad and the screen sometimes will go black. I want to get a little more time out of this machine so I hope these are short term problems. I am looking for a battery online to replace that.
ANALYSIS
Here is the trade we had on last week. Volatility is high so that means the near the money and at the money options are giving GREAT premium, but the options we deal with are not getting that great premium.
PCLN 835.00 Call .45
PCLN 840.00 Call (.20) This gave a net ROI of 5.00%
This was an easy trade this week as PCLN just shot up all week. This trade was put on Wednesday morning and was a nice trade to watch run. Now PCLN is coming close to the 52-week high so we might need to switch to the call side for this week if we stick with this stock for our spreads.
PAPER TRADE
Yahoo ongoing trade:
Yahoo Sell July22 Call $ 57 Buy Back $515
Yahoo Buy July20 Call -118 Sell Off $720
Yahoo Sell July17 Put 66 Buy Back $ 04 $ 5 $201
We sold this one off on the morning of May 21, 2013 and the results are above. We made a net of $206 This was a GREAT trade. I wish I had done this one for real!! I might be leaving some money on the table, but I have already made a great amount of money on this trade. On the paper trade I did 10 of these so I made $50 on the initial trade and then $2,010 when I sold it off. Now I am looking for another trade to replace this one.
COVERED CALLS
We still have our covered calls on Vivus and CBI again.
Symbol Company Stock Option Premium Initial Annualized
VVUS Vivus 13.09 June14 .16 2,676.00 4.18%
CBI Chicago Bridge 63.70 June70 .45 5,409.00 5.82%
These are the completed covered call trades this year:
Symbol Month Premium Month ROI Ann Month ROI Cum Prem Cum An ROI
VVUS January $32 1.19% 14.35% $32 14.35%
VVUS February $63 2.35% 25.25% $95 21.30%
VVUS March $28 1.05% 12.56% $123 13.79%
VVUS April $29 1.08% 13.00% $152 17.04%
VVUS May $44 1.64% 11.51% $196 14.64%
CBI January $50 1.12% 13.39%
CBI March $ 125 2.31% 27.73% $175 12.94%
CBI April $230 4.05% 48.67% $405 7.14%
VVUS – This stock is starting to break out from the $10-$12 range and slowly gain back up. It The weight loss drug is starting to make a hold in the market and they have other drugs that are receiving promising reviews and doing well in trials.
CBI – We have put on a covered call trade for June expiry. This is a bit of a stretch and hopefully the option will expire worthless. Even if it doesn’t we still have a great overall gain as we would have to sell at $70 and we bought at $54. This stock has been a real boon for the covered call strategy we have undertaken.
Some people would say that we have had a great year already for the portfolio. True if we go on return based on premium, but if we go with the traditional measure of call premium PLUS liquidation value of underlying stock then we are hurting. But I like to look at cash flow and we are doing well with this. This is the cumulative covered call results for 2013:
Symbol Invested $ Option Prem Call Away Div Total Return
VVUS $2,676.00 $ 196 $196 7.32%
CBI $4,480.00 $ 50 $320 $370 8.26%
CBI $5,409.00 $355 $ 91 $5.00 $451 8.34%
Totals $12.925.00 $601 $411 $5.00 $1,017 7.87%
DIVIDEND STOCKS
Here are the two portfolios updated.
This portfolio is an income portfolio made up of 100 shares of each stock. These stocks are some blue chips, some Business Development Companies (BDCs), Closed End Funds (CEFs) and some small caps that look like they will grow. Some of these I have talked about before, some not. I will give a brief note on each of them in the coming weeks:
Ticker Name Buy Current Div Pay Div
Price Price Date Yield
PSEC Prospect Capital 10.68 10.81 05/29/2013 11.96%
AGD Alpine Global Dynamic 4.84 4.97 05/29/2013 7.43%
TCPC TCP Capital 15.28 15.97 06/29/2013 8.99%
MO Altria 34.26 37.09 07/10/2013 5.17%
T ATT 37.34 36.75 08/01/2013 4.82%
ARCP Am. Realty Capital 16.69 16.54 05/15/2013 5.37%
GLAD Gladstone Capital 8.98 8.61 05/31/2013 9.35%
STI Sun Trust Bank 29.37 31.94 06/14/2013 1.36%
WFC Wells Fargo 37.74 40.24 06/01/2013 3.18%
KKR KKR & Co Units 20.77 20.16 05/21/2013 6.39%
Buy Price Portfolio Value = $21,595.00
Current Price Portfolio Value = $22,314.96
Gain/(Loss) So Far = $719.96
Portfolio Return = 3.33%
Dividends Received So Far = $34.50
Portfolio Return w/ Dividends = 3.49%
Current Prices as of 05/24/2013 Closing Price
We keep our dividend moat portfolio. I have made the new portfolio as a way to show that a good return can come from another type of dividend model besides the moat philosophy. All the new equities are well rated in their business area and are quite strong companies. The financials look great so the dividend payout is relatively safe. Also many of the new equitiesmust pay out most of their earnings to keep their tax status. slow and steady climb with this portfolio. This past week many of the stocks in the portfolio paid the quarterly dividend. Total return is now over 8% with the portfolio portion at almost 7%. This is great! This portfolio is showing my primary philosophy with stocks – buy great companies on sale and then let them ride.
Both portfolios will carry a 15% stop on them. Portfolio #1 has 100 shares of each stock and will generate $1,198 in dividend revenue assuming no reinvestment. This gives a 4.01% return. Portfolio #2 will have $5,000 invested into each stock and there will be dividend reinvestment. I will carry shares out 3 decimal places. So here is how Portfolio #2 shakes out:
Ticker Name Buy Current Div. Pay
Price Price Date Shares
KO Coke 36.89 42.24 07/01/2013 136.854
AGD Alpine Global Dynamic 5.76 4.97 05/29/2013 982.153
AOD Alpine Total Dynamic 4.37 4.23 05/29/2013 1,257.549
MO Altria 34.26 37.09 07/10/2013 150.766
INTC Intel 22.87 23.92 06/01/2013 240.000
HIX Western Asset Hi Inc II 10.53 10.18 06/22/2013 527.137
MCD McDonald’s 91.74 100.29 06/15/2013 55.425
MSFT Microsoft 28.55 34.27 06/13/2013 183.492
JNJ Johnson and Johnson 68.03 86.82 06/12/2013 71.547
PG Proctor and Gamble 68.72 81.88 08/15/2013 73.080
Buy Price Portfolio Value = $51,996.01
Current Price Portfolio Value = $56,722.75
Gain/(Loss) So Far = $4,726.74
Dividends Received So Far = $673.14
Dividend ROI = 1.29%
Stock Return = 7.80%
Total Return = 9.09%
Here is the watch list. Our three keys make getting on the list and then getting into the portfolio rather difficult. Here are the three keys: (1) a moat business model, (2) dividend of at least 3%, (3) solid fundamental analysis numbers.
Ticker Recent Date Div Target
Name Price Yield Price
COP ConocoPhillips 62.53 4.53% 58.00
BAC Bank of America 13.24 0.35% 11.00
BRKB Berkshire Hath B 110.70 No Div Pd 100.00
ConocoPhillips – This stock has great potential as the move significantly higher as the recent earnings was good and it has beat the street consistently.
Bank of America –This stock is keeping up a pattern of growing revenues and earnings after nearly collapsing in the banking crisis. This is a stock that I wish I had gotten into at this time last year at around $4.00
Berkshire Hathaway B Class – This is the way more affordable way to get into Berkshire Hathaway and Warren Buffett than the $150K+ regular Class A shares. Over any period of time 2years or greater an investment in Berkshire has made money. This past year (2012) the S&P beat Berkshire, only the 5th time that has happened in the history of Berkshire – over 40 years. So this is one that is purely price appreciation. DISCLOSURE – I own this in my personal stock portfolio –one of the few stocks I do own.
So far we are using the week’s downtrend to get closer to our target prices. Overall we are doing well with the two portfolios and I am very pleased.
QUESTIONS
All charts from freestockcharts.com. This is not a paid endorsement. They are a good free app that only asks for credit on their charts when you use them.
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.
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Twitter: @awagel01
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TTFN
Ash
