Option to Profit Week in Review
May 5 – 9,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
7 / 7 2 8 4  / 0 3   / 0 0

    

Weekly Up to Date Performance

May 5 – 9, 2014   

New purchases for the week beat the time adjusted S&P 500 by 0.8% and also surpassed the unadjusted S&P 500 index by 0.8% during a week that showed lack of commitment and tentativeness, yet almost finished with a closing record on the DJIA.

The market continued its bizarre pattern of alternating weekly gains and losses for the past 10 weeks, posting an unadjusted  loss this week of 0.2% and with an adjusted loss  0.2%. On the other hand, new positions gained 0.6% during the time period.

For positions closed in 2014 the performance exceeded that of the S&P 500 by 1.7%. They were up 3.4% out-performing the market by 100.3%.

This was just one of those weeks that we could have done without. Although there was a fair amount of trading, with 17 trades, it still wasn’t very fulfilling.

It wasn’t really a bad week, at least if using the S&P 500 performance as an indicator, but the details of the week were not worth cheering about and my bottom line wasn’t the kind that I usually like seeing.

In addition to fizzled rallies and personal blows to shares like Whole Foods, it was a week that really pointed out the market’s vulnerability. In this case the vulnerability is shown first and foremost among the “high flier” kind of stocks like Tesla, FireEye and many others that have reported earnings that were light of expectations.

While that’s understandable, after all those who live by the sword know what their likely future holds, but the brutality has been fairly indiscriminate and sometimes without reason. It also took out some companies that had previously reported nice earnings, like YELP, but then got caught up by being in the wrong neighborhood at the wrong time.

It’s also understandable why some may have soured on Amazon, for example, but there really wasn’t any compelling reason to have jumped ship so effusively, even after earnings, but especially not afterward, when it, too, was lumped in with others.

While I tend to focus on the negative, it’s obviously the bottom line that matters and  how holdings are set up for future success.

At the moment that’s even more hard to know than usual as there’s really nothing to indicate where the market may get any encouragement and in what sectors that encouragement may be manifest. Even the more traditional corners of safety haven’t re
ally fared well other than for a day or so as the market just goes back and forth between tepidly embracing risk and running from it.

On a positive nore new purchases outperformed a slightly weaker market. It was also nice adding to the stream of dividend income, as thus far the annualized dividend rate on closed positions for 2014 is up to a personal high of about 4.1%. For the time being I think that chasing dividends may continue being a good idea as market uncertainty punishes secure dividend paying stocks less than it does the rest.

It was also nice seeing a nice number of rollovers, with a little more diversification in time than in the past month, but those forward premiums are still very low, as volatility hasn’t really climbed as the market has been wavreing.

At least those rollovers help to pay the rent and help to maintain my irrational tendency for lavishness.

While those were all and good, I would definitely have liked to have seen more existing positions get their covers, but the hope for some continued share gains when the market was showing some trading strength would just fade and take with it the opportunities to get decent premiums. Additionally, with the volatility again at their low points even consideration of “DOH Trades” takes a break as it’s hard to justify the reward, given the risk of missing out on some unexpected advances.

I’d very much like to see that risk-reward proposition be adjusted a little as I would be anxious to execute some more of the DOH trades to try and take advantage of any continuing flatness in the market with those existing positions and generate some additional revenue and ROI.

With some assignments this week to again fund next week’s activity and already having a fair number of positions set to expire next week, I’m not overly eager to open many new positions. With the cash reserves restored a bit I would much prefer to generate the income by selling calls on existing positions, rather than opening new ones.

Of course, eventually all actions are situational. Depending on what looks appealing next week ultimately determines how those plans work out. While I generally like seeing downward trading starts to the week this time around I wouldn’t mind seeing a positive open, and as if it wasn’t asking too much, not to see the rally fade before a buying frenzy sets in.

It has been a while since we’ve had one of those, but even if it was just a teasing dead cat, it would be welcome.

 

     

This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as as in the summary.below

(Note: Duplicate mention of positions reflects different priced lots):



New Positions Opened:  BBY, EBAY, FAST, MET, PFE, SBUX, STX

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  BMY, GM, MET, SBUX, TXN

Calls Rolled over, taking profits, into extended weekly cycle:  EBAY (5/23), MA (5/23), PFE (5/23)

Calls Rolled over, taking profits, into the monthly cycle:  none

Calls Rolled Over, taking profits, into a future monthly cycle: none

Calls Rolled Up, taking net profits into same cyclenone

New STO:  FDO, JPM

Put contracts sold and still open: none

Put contracts expired: none

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:   BBY, GPS, UNH, VZ

Calls Expired:   EBAY, FDO, LOW

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:  MET (5/7 $0.35), PFE (5/7 $0.26), SBUX (5/6 $0.26), WLT (5/8 $0.01), WY (5/7 $0.22)

Ex-dividend Positions Next WeekSTX (5/12 $0.43)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BX, C, CLF, COH, DRI, FCX, FDO, GM, JCP, LOW, LULU, MCP, MOS,  NEM, PBR, RIG, TGT, WFM, WLT, WY (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.



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