A Rare Directional Trade! Review of Week Ending June 21, 2013

Hey once again!

We did a GLD trade again, but this time it was a directional.  Our trading system is designed to work very well within a moderate range of volatility.  Last week and most of this week was well without that range of volatility.  Then Thursday we got a great opportunity.  With the decline on the Dow after the Bernacke speech Gold took a great nose dive and we were able to use our knowledge gained when we got creamed a few months ago to make a little money.  We will go through this below.

Eldest daughter just finished her first year in the USAF.  So far she is doing well and loving what she does. 

ANALYSIS

Here is the trade we had on last week:

GLD    122.50   Put Bought at .37

GLD    122.50   Put Sold at      .64    This gave a net ROI of 72.9%

If we could have gotten any premium at all this would have a great chart for a call spread trade.  The trend line was down all week.  The price never got above the 200 Day SMA and only approached the 50 Day SMA on Friday.  Unfortunately there was really no premium out there this week.  This is why when we say the huge drop of almost 200 points in the Dow in the premarket I set up the directional GLD trade.  In the Thursday pre-market the price dropped over $5,00 and the total drop ws just over $7.  but the drop after the market opened gave us enough price increase in the put options (remember when underlying price goes down - put option prices go up) to make us a good deal of money.   The last time we had a two day drop of over 300 points I was decimated on a trade.  So this time I planned to make some money on it. 

This was considered a day trade by my broker because I entered it early on the morning just after the market open and closed it out right before the close.  When doing directional trades in the weekly options it is very difficult to hold these, especially when you enter them on a Thursday!

PAPER TRADE

There are no paper trades on at this time.

      

COVERED CALLS

We still have our covered calls on Vivus and CBI again.

Symbol    Company       Stock     Option      Premium        Initial        Annualized

VVUS             Vivus       13.84      June14      .16                  2,676.00         4.18%

CBI     Chicago Bridge   59.17      June70      .45                  5,409.00         5.82%   

These are the completed covered call trades this year:

Symbol  Month    Premium  Month   Ann Month  Cum Prem   Cum An ROI

                                                ROI          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%

VVUS    June            $16          0.597%         7.17%               $212            15.84%          

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%

CBI       June             $45          0.831%               9.98%               $450              8.42%

VVUS – This stock has broken out of the $10-$12 range for now.  It has moved up to the $13-$14 range and pushing $15.  We narrowly escaped getting called away here and will just keep plugging away getting more and more premium.       

CBI – We are in a good zone for this one.  Again we narrowly escaped getting called away.  My outlook on CBI is much better than VVUS.  There was a dip when the market dropped a enough this week to keep us in the game.  With this one if we had been called away we would have made even a little more, but we don’t have to worry about that now!  We will put on another CBI covered call as soon as we get good premium. This is the cumulative covered call results for 2013:

Symbol           Invested $       Option Prem     Call Away    Div     Total     Return

VVUS             $2,676.00        $ 212                                                   $212    7.92%

CBI                 $4,480.00        $  50                    $320                        $370    8.26%

CBI                 $5,409.00        $400                    $  91           $5.00   $496    9.17%

Totals            $12.925.00        $662                    $411           $5.00   $1,078 8.34%

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      10.52       06/29/2013         11.96%

AGD   Alpine Global Dynamic         4.84       4.57        06/29/2013          7.43%

TCPC  TCP Capital                       15.28     16.08       06/29/2013          8.99%

MO      Altria                                 34.26     34.93       07/10/2013          5.17%

T          ATT                                  37.34     34.47       08/01/2013          4.82%

ARCP  Am. Realty Capital             16.69    14.45        09/15/2013          5.37%         

GLAD Gladstone Capital                 8.98      8.05        06/31/2013          9.35%

STI    Sun Trust Bank                    29.37     31.23       09/14/2013          1.36%

WFC  Wells Fargo                        37.74     40.96       09/01/2013          3.18%

KKR KKR & Co Units                 20.77     18.70       08/21/2013          6.39%

Buy Price Portfolio Value =             $21,595.00

Current Price Portfolio Value =      $21,455.48

Gain/(Loss) So Far =                             -$139.52

Portfolio Return =                                    -0.65%

Dividends Received So Far =                 $103.03

Portfolio Return w/ Dividends =             -0.17%

Current Prices as of 06/22/2013 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 equities must 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. 

Here is how Portfolio #2 shakes out:  

Ticker Name                            Buy       Current      Div. Pay                     

                                                  Price      Price          Date                Shares

 KO     Coke                                 36.89      39.76       07/01/2013         136.854

AGD   Alpine Global Dynamic        5.76         4.57       06/29/2013         982.153

AOD   Alpine Total Dynamic          4.37        3.91        06/29/2013      1,257.549

MO      Altria                                34.26      34.93       07/10/2013         150.766

INTC   Intel                                  22.87      24.20       09/01/2013         240.000

HIX    Western Asset Hi Inc II       10.53       8.85       06/22/2013         527.137       

MCD   McDonald’s                      91.74     97.23       06/15/2013           55.425

MSFT  Microsoft                          28.55     33.27       06/13/2013         183.492

JNJ      Johnson and Johnson         68.03     83.20       06/12/2013           71.547

PG       Proctor and Gamble          68.72     77.43       08/15/2013           73.080

Buy Price Portfolio Value =             $51,996.01

Current Price Portfolio Value =      $53,961.51

Gain/(Loss) So Far =                           $1,965.50

Dividends Received So Far =               $833.79

Dividend ROI =                                       1.60%

Stock Return =                                        2.18%

Total Return =                                         3.78%      

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            60.36                                4.53%         58.00

BAC    Bank of America         12.69                                0.35%         11.00

BRKB Berkshire Hath B        112.38                         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 5^th 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. 

Reach me @:

Email:  hashleycm@yahoo.com

Twitter: @awagel01

Stocktwits:  awagel01

Or leave a comment on the blog

TTFN

Ash

We are back on the GLD bandwagon - Results for week ending June 7, 2013

Hello fellow traders,

Well, we got back on the GLD wagon last week.  Usually when volatility is high so are options premiums…and they were except for the weekly options that expired last week.  Going out to the following week (expiry 06/14/2013) wasn’t much there either.  The premium price was out in the monthlies.  This was good and bad.  Good in the sense that there was premium.  Bad in the sense that with the market swinging wildly from day to day it was very hard to get into a trade.  So I stuck with the weekly that I am somewhat familiar with and took a low premium, but very safe trade.

This past week, youngest daughter won a coloring contest in the local paper and got two FREE tickets for the Cirque de Soleil show Quidam.  She loved it, mom on the other hand was largely unimpressed.  Monday youngest daughter is off to camp for the week.  I bet she will have a great time as many of her school friends are going this week as well.

Son has been working for a friend of ours.  She is a handyman and does terrific work.  IF you want her contact info contact me if you are in Eastern Iowa, I can say with high certainty she does great work.  This has been a very good thing for Son so far.  Our friend is demanding, but not overbearing so he is getting a good sense of what a boss will be like when he gets out in the world.  Also he is very interested in learning carpentry and handyman skills so he is learning a ton while working for her. 

Eldest daughter is doing well in the Air Force.  She is enjoying what she is doing and stretching herself personally and professionally.  The military was a good move for her.  Only problem is that dad and daughter don’t get to spend the summer together like we used to.  It is hard to let them go!!!

ANALYSIS

Here is the trade we had on last week:

GLD    139.50   Call     .09

GLD    149.50   Call   (.05)    This gave a net ROI of 4.00%

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.

We were really never in danger with this trade.  As can be seen by the White lines that are the markers of our trade.  I scaled back the profit percentage of the trade and that helped us go out further on the option chain.  A look at the trends show that price never reached above the 200 day SMA for the past month.  Also when the price got above the 50 day SMA it quickly retreated.  So by putting our trade parameters above the 200 day SMA it was with 94% certainty that the trade would be successful. 

After our GLD debacle I have put some more stringent controls on the model.  Now realize that nothing would have stopped the last loss as the European gitters that made the market drop all happened during the closed hours, and on Thursday at the close before all the thoughts of Sovereigns selling their gold came out we still had a 91% probability of success and the market was trending our way.  But by taking a longer look at the moving averages and moving further out the option chain I am trying to mediate as much as possible those happenings from going on again.  When the debacle happened if I would have noticed the trend of staying below the 50 day SMA and put a trade in above the 200 day SMA all would have been good.  So I have incorporated that into my analysis for the trades made from now on. 

 

PAPER TRADE

There are no paper trades on at this time.

      

COVERED CALLS

We still have our covered calls on Vivus and CBI again.

Symbol    Company       Stock     Option      Premium        Initial        Annualized

VVUS             Vivus       14.26      June14      .16                  2,676.00         4.18%

CBI     Chicago Bridge    60.19      June70      .45                  5,409.00         5.82%   

These are the completed covered call trades this year:

Symbol    Month     Premium   Month   Ann Month   Cum Prem   Cum An
                                                     ROI           ROI           Prem              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 has broken out of the $10-$12 range for now.  It has moved up to the $13-$14 range and pushing $15.  If the current price holds I will be called away for this stock.  This would be a two edged sword for me.  I am carrying a loss on this stock after buying it really high – the bad side.  The good side is that I could get back into this at a much lower basis and offset some of my gains this year with the loss.  We still have a couple of weeks to go before expiry and the trend is moving lower again in the stock so we will have to wait and see if we are called away.  The buzz is starting wear off from the promising trials news from a couple of weeks ago I think.       

CBI – We are in a good zone for this one.  The price swooned up last week, but still was far away from our strike.  I am pretty certain that we will not be called away on this one.  The company itself is still rolling.  Business is good although guidance was a little weak for the year and that chilled the stock.  Then last week with the rally Friday the stock moved well, and now I am thinking that there will be profit taking as the stock has shot up for the past year so I am looking for some down trends this week.  If a big move comes on and we do get called away then we will still make out like a bandit.  We bought at $54 and would get $70 on a call away this month that is a great gain in and of itself.  Plus we have already pocketed the option premium.  Also the ex-div date is Wednesday so we will hold through that and that means we will be getting dividend income for the stock as well.  The cup overfloweth on this stock!    

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      10.26       06/29/2013         11.96%

AGD   Alpine Global Dynamic    4.84        4.82        06/29/2013          7.43%

TCPC  TCP Capital                      15.28     16.02       06/29/2013          8.99%

MO      Altria                               34.26      36.15       07/10/2013          5.17%

T          ATT                                  37.34      35.45       08/01/2013          4.82%

ARCP  Am. Realty Capital          16.69     15.01       06/15/2013          5.37%         

GLAD Gladstone Capital              8.98       8.48       06/31/2013          9.35%

STI    Sun Trust Bank                   29.37     32.25       06/14/2013          1.36%

WFC  Wells Fargo                        37.74     41.25       09/01/2013          3.18%

KKR KKR & Co Units                20.77     19.56       08/21/2013          6.39%

Buy Price Portfolio Value =             $21,595.00

Current Price Portfolio Value =      $21,967.53

Gain/(Loss) So Far =                              $372.53

Portfolio Return =                                     1.73%

Dividends Received So Far =                  $85.50

Portfolio Return w/ Dividends =              2.12%

Current Prices as of 06/07/2013 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. 

Here is how Portfolio #2 shakes out:  

Ticker Name                            Buy       Current      Div. Pay                     

                                                  Price      Price          Date                Shares

 KO     Coke                                 36.89      41.41       07/01/2013         136.854

AGD   Alpine Global Dynamic    5.76        4.82        06/29/2013         982.153

AOD   Alpine Total Dynamic       4.37        4.10        06/29/2013      1,257.549

MO      Altria                                34.26      36.15       07/10/2013         150.766

INTC   Intel                                  22.87      24.59       09/01/2013         240.000

HIX    Western Asset Hi Inc II    10.53       9.63       06/22/2013         527.137       

MCD   McDonald’s                      91.74     98.28       06/15/2013           55.425

MSFT  Microsoft                          28.55     35.67       06/13/2013         183.492

JNJ      Johnson and Johnson        68.03     84.91       06/12/2013           71.547

PG       Proctor and Gamble          68.72     77.75       08/15/2013           73.080

Buy Price Portfolio Value =             $51,996.01

Current Price Portfolio Value =      $55,851.93

Gain/(Loss) So Far =                           $3,855.92

Dividends Received So Far =               $790.73

Dividend ROI =                                       1.52%

Stock Return =                                        5.90%

Total Return =                                         7.42%      

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            62.32                                4.53%         58.00

BAC    Bank of America         13.38                                0.35%         11.00

BRKB Berkshire Hath B        115.31                         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 5^th 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. 

Reach me @:

Email:  hashleycm@yahoo.com

Twitter: @awagel01

Stocktwits:  awagel01

Or leave a comment on the blog

TTFN

Ash