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

Results for Week Ending October 26, 2012

Hello followers, lurkers and casual observers,

This week was a weird week.  This was the big week for earnings season.  Most of the companies that were set to report for the quarter reported last week.  There were big point gains and point losses on the major indexes this week.  Also the different sectors in the S&P 500 were gyrating back and forth during the week.

AAPL gave an enticing target this week.  Option premiums on both the call and put sides of the chain were extremely high.  It was tempting to put a bet on like what we did with GOOG last week.  If we had done so it would have been very profitable.  But you long time readers know I am not a fan of earning speculation plays.  AAPL ended up following the lead of other big tech sector stocks last week and kept the downward plunge.  But there was enough other items out there like:  the product announcement earlier in the week, the renewed buzz about Apple Radio, the supply problems for the iPhone 5.  These things kept me out of the AAPL gall spread or outright buying of puts.

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 4 of MAX10 this week.  I am getting the feeling that this is a muscle building session.  I have not lost any weight, but during the workouts I have noticed that I can push myself harder and do a little more than last week, of even when this last session started.  My toe seems pretty good now and I think that next week I will be back to 100%.

The two youngest are finishing up their first marking period and getting geared up for conferences.  I always like this part as the teachers are very engaging and let you know how your kids are going.  Boy is getting pretty good grades – consistent to where he was last year.   Youngest received her first GPA this year in fifth grade – 3.8 most excellent.

Eldest daughter got to her duty station and starts her first tour of duty on the 29^th.  I hope she has a great learning experience during this tour.    

Ok, let’s get on with the analysis:

ANALYSIS

Here is the trade:

GLD    167.50     Call     $0.151

GLD    168.50     Call    ($0.090)               This gave a $0.061 Net Credit for a 6.1% 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 = 5.05% - Remember – we equally distribute assets among trades

We have done trades like this before.  I like to call them ladder trades as the trades look like rungs on a ladder when you look at them on the graph.  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. 

Looking at the chart it seems that we could have run a condor type trade.  I seriously thought about this, but I couldn’t get a put spread that met all of my requirements.  I also gave lots of consideration to making a trade that would give me some extra income but not hit my ROI requirement.  I probably could have done this as long as my overall ROI requirement kept intact, but I didn’t.  That is a thing I will have to keep in mind the next time this scenario comes up.

PAPER TRADE

Here are the Paper Trades from last week and our reasoning for getting into the trade:

AAPL   605.00   Put      Bought  Monday @ $0.92

                                    Sold Friday          @ $8.60

                                    Net Profit =              $768

1.      This put was bought to take advantage of the continuing slide of AAPL that has gone on for most of the month

2.      This was a big gamble with the product announcement coming out in the middle of the week, but when the numbers for the iPad came out we hit it big.  I probably should have sold this Thursday but still grabbed a nice gain for the paper account

3.      I followed the overall trend with this, but was greatly helped with the big downward bounce from the product announcement.  If not for that I probably would have lost on this trade. 

4.      The probability calculator had a 86.4% of success when I bought the put.

The paper trade was a success, but I really went out on a limb for this.  The trend was down for AAPL as well as the sector, but AAPL is notorious for beating those estimates and sentiments.  The item that really saved us was the numbers of iPads sold quoted in the product announcement.  The number was significantly down from what the Street thought they were going to be.  The big dip happened during the announcement.  As a result there was no big dip when earnings came out Thursday evening.  (There was a quick big dip, but still in aftermarket trading that dip largely went away and AAPL ended up Friday closing only a little more than $5 down.) 

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          Option            Initial              Annualized

VVUS             Vivus               17.55      Nov 23         .41                   2,676.00          18.38%*

MCD               McDonalds     88.72                                                   9,174.00             1.30%

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

VVUS – As we predicted last week, it looks like we are heading in for the support line of $17.46.  I am looking for this stock to start rebounding soon.  The drugs VVUS has in the pipeline are all still showing positive signs and the fundamentals of why I picked this company really have not changed.  We are getting really awesome premiums from this stock and technically it looks like we will start to pick up the share price soon.        

MCD is disappointing!  The option premium for this stock has basically dried up.  It is still a good stock to have overall and I will continue to hold it, but right now I am moving this from the covered call portfolio to the dividend portfolio. MCD will be found there next week.    

DIVIDEND STOCKS

Here is our Dividend Stock Portfolio:

Ticker Name                                                  Buy         Current      Date                Div

                                                                        Price           Price                               Yield  

 KO     Coke                                                         38.17      37.04       08/27/2012          2.71%

AGD   Alpine Global Dynamic Fund                    5.76        573        08/27/2012        12.18%

AOD   Alpine Total Dynamic Fund                      4.37        4.24       08/27/2012        14.80%

MO      Altria                                                        34.26      31.76       08/27/2012          5.17%

INTC   Intel                                                          22.87      21.95       10/01/2012          3.94%

HIX    Western Asset Hi Income Fund II          10.53      10.37       10/15/2012          9.44%         

Current Prices as of 10/26/2012 Closing Price

As I said above we will now see MCD in this portfolio as this is a great company making money hand over fist.  Earnings were a disappointment and the stock has taken a hit because of it.  But this is a great company and will rebound soon.  We get the dividend for this and will be good.

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.  Three Blue Chips and two 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

MSFT  Microsoft                         28.21          10/05/2012           3.12%         28.00

PG       Proctor and Gamble         69.44          09/21/2012           3.27%         62.50

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

MSFT – I will probably be picking up this stock any day now as we are nearing my target.    

JNJ – Still waiting!!!

PG – Again still waiting!

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