Hello fellow traders!
I hope your Independence Day was a great one! WE are the luckiest people on the planet to live in a country where we have soooo much freedom! A great country to celebrate and also a time to think about the radical ideas that formed the USA.
ANALYSIS
Here is the trade we had on last week:
GLD 121.00 Put Bought at 1.80
GLD 121.00 Put Sold at 3.28 This gave a net ROI of 82.2%%
This was a short week due to the July 4 holiday. Also a lot of news hit this week. European leaders made pronouncement after pronouncement reaffirming that the Central Banks of Europe would defend the Euro and not let the old country slide into recession. This came out Thursday, our July 4th holiday, but helped the markets soar on Friday and when the market soars, the GLD usually drops. That is why we went with this directional trade Friday.
I was VERY hesitant to get into a trade Wednesday before the early close The jobs number for the US was coming out on Friday, the Europeans were having all kinds of news coming out and the Egyptian governing crisis was in full bloom. That type of instability is not good for the options trader.
Also, as with last week, the option premium in the options on our list just wasn’t there. The steep drop at the beginning of the Friday session was our key to get the directional trade going. Trading volume was going to be light as many traders took Friday off as part of the holiday. Further in the recent history of GLD, once a big drop happens there is little recovery. Lastly the price action overall for the week was downward, so we put the trade at the $121 level, the rounded dollar amount of the cross of the 50 and 200 day SMA. So in the premarket when the price drop was steep in the spot gold price, these were the indicators that we needed to jump on a GLD trade in the outward weeks right at the beginning of the day. So right at the open we entered this trade and sold with about an hour to go.
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 12.38 July14 .20 2,676.00 8.96%
CBI Chicago Bridge
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 $12 0.597% 7.17% $212 15.84%
CBI January $50 1.12% 13.39%
CBI March $ 125 2.31% 7.73% $175 12.94%
CBI April $230 4.05% 48.67% $405 7.14%
CBI June $45 0.831% 9.98% $450 8.42%
VVUS – After a brief break out of the $10-$12 range VVUS has sunk back into this zone. We continue to keep getting premium and waiting for the price to get up to break even.
CBI – We are in a good zone for this one. The stock has performed very well this year. Now the drying up of the premium. Right now there is not enough premium to put on a covered call trade. 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 10.76 07/29/2013 11.96%
AGD Alpine Global Dynamic 4.84 4.57 07/29/2013 7.43%
TCPC TCP Capital 15.28 16.08 07/29/2013 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 07/31/2013 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 = $22,223.74
Gain/(Loss) So Far = $638.74
Portfolio Return = 2.96%
Dividends Received So Far = $159.24
Portfolio Return w/ Dividends = 0.74%
Current Prices as of 07/05/2013 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 40.52 10/01/2013 137.800
AGD Alpine Global Dynamic 5.76 4.63 07/29/2013 994.710
AOD Alpine Total Dynamic 4.37 3.94 07/29/2013 1,274.571
MO Altria 34.26 35.49 07/10/2013 150.766
INTC Intel 22.87 24.06 09/01/2013 242.196
HIX Western Asset Hi Inc II 10.53 8.71 07/22/2013 531.753
MCD McDonald’s 91.74 99.86 09/15/2013 55.964
MSFT Microsoft 28.55 34.21 09/13/2013 184.025
JNJ Johnson and Johnson 68.03 87.87 09/12/2013 72.098
PG Proctor and Gamble 68.72 78.34 08/15/2013 73.080
Buy Price Portfolio Value = $51,996.01
Current Price Portfolio Value = $54,964.85
Gain/(Loss) So Far = $2,968.84
Dividends Received So Far = $906.76
Dividend ROI = 1.74%
Stock Return = 3.97%
Total Return = 5.71%
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 62.31 4.53% 58.00
BAC Bank of America 13.06 0.35% 11.00
BRKB Berkshire Hath B 114.96 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.
Reach me @:
Twitter: @awagel01
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Or leave a comment on the blog
TTFN
Ash
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