|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED|
|6 / 6||1||6||4 / 1||7 / 0||0|
Weekly Up to Date Performance
New purchases again trailed the time adjusted S&P 500 this week, this time by 0.1%, but beat the unadjusted index by 0.2%.
The market showed an adjusted gain for the week of 0.4%, while the market actually lost 0.2% for the week. New positions, by contrast, advanced 0.5% for the week.
For the 18 positions positions closed in 2014, performance exceeded that of the S&P 500 by 1.1%. They were up 3.8% out-performing the market by 38.4% as the number of data points begins to increase. While very pleased with that level of out-performance, I don’t expect it to continue at that pace, particularly if the market continues higher and volatility remains so low.
For the second consecutive week I’m not really certain how I felt about performance.
As always, the bottom line is always the most important outcome, but it’s always good to look at the component pieces that create the bottom line and whether objectives are realized.
The biggest disappointment this week was the inability to get decent rollover opportunities on a number of positions after they opened lower today, distancing themselves from strike prices too much to make the trades worthwhile.
Those included Campbell Soup, Phillip Morris, L Brands, Transocean and Darden Restaurants. Three of those went up nicely just yesterday and gave me hopes of getting those trades done, perhaps even seeing assignments.
While the assignments could have been done yesterday the cost to buy back shares was just too high, especially due to the day’s buying strength. In hindsight it makes you think that it’s better to take what is there to be taken rather than risking the chance that it will be gone tomorrow.
On the other hand a fair number of rollovers and assignments occurred helping to replenish cash reserves and create the opportunity to seek new positions next week without necessarily digging into baseline reserves.
It was also a nice week for dividends, but by and large those positions had difficult times maintaining price, as they showed weakness after going ex-dividend.
With the market having ended the week so flat, I would have anticipated a better performance on new positions. While they did outperform the market, they fell short of the 1% threshold in a week that it should have been relatively easily attained.
The way the market lost steam as it headed into the final hour was deflating in any number of ways, but especially where it counted the most.
It may be good to have a little extra time off this coming week for everyone to get back on the same page.
Trading is listless and without theme and, as seen so often this week, marked by large and sudden moves that seem irrational for their lack of known catalyst.
This was a week, that if you followed closely, had lots and lots of intra-day swings in individual stocks, which is something that you don’t see terribly often. The swings went in both directions and weren’t very long lived, for the most part, so conclusions aren’t obvious other than occasional conviction in selling and then conviction in buying, but those swings can be disruptive to individual strategies.
As mentioned last week, the previous two quarters as a guide, the financials did do quite well, with the exception of Citigroup, yet that didn’t really help the more broad market. Next week sees the non-financial beginning to report their numbers and it still surprises me that the call has been for a 6% increase in earnings, unless share buybacks can have so significant of an effect.
That’s not really a sustainable strategy for growth. Sooner or later there has to actually be economic activity that moves a stock’s fortunes forward.
I anticipate next week being one that will be responsive to earnings, in the absence of much other scheduled activity. I don’t anticipate being overly active in adding new positions next week, but would like to see some further weakness or at least tentativeness in trading to begin the week, as some prices are beginning to look a little more attractive.
I just don’t want to jump the gun and ask the same question asked when someone tells a tasteless joke.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: HFC, LB, LOW, VZ, WAG, YUM
Puts Closed in order to take profits: none
Calls Rolled over, taking profits, into the next weekly cycle: none
Calls Rolled over, taking profits, into extended weekly cycle: ANF, HAL
CallsRolled over, taking profits, into the monthly cycle: none
Calls Rolled Over, taking profits, into a future monthly cycle: FCX, HAL, LXK, WY
Calls Rolled Up, taking net profits into same cycle: none
New STO: LLY
Put contracts sold and still open: **
Put contracts expired: ANF
Put contract rolled over: none
Long term call contracts sold: none
Calls Assigned: CY, FAST, MDLZ, MOS
Calls Expired: AGQ, CPB, DRI, GPS, LB, PM, RIG, WFM
Puts Assigned: none
Stock positions Closed to take profits: none
Stock positions Closed to take losses: none
Calls Closed to Take Profits: none
Ex-dividend Positions: CHK (1/13 $0.09), FCX (1/13 $0.31), WFM (1/15 $0.12), YUM (1/15 $0.37), LOW (1/17 $0.18)
** Some people had early assignment of ANF puts on November 8, 2013. Subsequently OTP Trading Alerts were sent to sell new calls on ANF, as well as to roll over puts. The strike prices on the two trades differ, but the premium differentials have this far been virtually identical through a third round of rollovers, with strike prices adjusted on calls and puts to $36 and $35, respectively, from the original $35.50 put sale.
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, APC, CLF, CPI, DRI, FCX, GPS, LB, JCP, MCP, MOS, NEM, PBR, PM, RIG, TGT, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)
* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.