Option to Profit Week in Review
August 25 – 29,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
3 / 5 5 2 3  / 2 0  / 0 0

    

Weekly Up to Date Performance

August 25 – 29, 2014

New purchases for the week surpassed the unadjusted S&P 500 by 1.0% and the adjusted index by 1.5% during a week that the market was again faced with no news and elected to ignore other potential news, as setting new closing rtecords on three of its trading days.



New positions opened this week went 1.8% higher, while the overall market was 0.8% higher on unadjusted basis and 0.3% higher on an adjusted basis, as it was largely unchanged for the final three days of the week.

This week existing positions returned to outperforming the broader market, as those positions rose by 1.3% in absolute terms and 0.5% in relative terms.

Performance of closed positions continued to out-perform the S&P 500 performance by 1.7%. They were up 3.6% out-performing the market by 89.0%. 

Another week of no real news and more new records to show for it, as the market actually seemed to be ignoring what was going on in the world.

Realizing that news could have detrimental impact, based on previous incidents around the world, ignoring what is going on seems like a great idea and may have application to all phases of life.

Barely a month ago we were all worried about how large the imminent correction would be and were wailing about the spike in volatility, but as has been the case time and time again over the past few years the slightest weakness became a signal to jump in.

All in all, this was a good week, despite not having made too many trades.

As is sometimes the case, it can be a question of having either the right or the wrong stocks at any given period of time, but in the longer term those sort of things should equilibrate. This week it was just a fortunate combination of events that helped to outpace the market.

This week the existing collection of stocks out-performed the market, but received some help from a number of ex-dividend positions and some additional income flowing in from option premiums.

Weeks such as this one, that aren’t overly strong in the broader market are the ideal ones if covered positions can be created.

Fortunately, this week, while not overly abundant in trades did appear to have enough of them in the various categories to be able to put together a nice performance.

The one thing missing was an adequate number of rollovers.

While no positions expired there were relatively few positions to be rolled over and even fewer next week as just a single existing position is set to expire next week.

With a good number of assignments this week and cash returned from the expiration of puts sold there is money available for new positions to be created next week and there certainly is a need to create some new positions to populate the weekly expiration list.

However, the premiums, just as they were this week, are at very low levels that will be even lower next week, as there are only 4 trading days of time premium.

That situation creates some challenge in finding positions that can offer a total return of income that seems to be commensurate with the risk. This past week that was mitigated by also looking for dividends, but there aren’t quite as many attractive plays next week.

While I always think about risk I also am less inclined to add too much until its clear that the immediate geo-political risk isn’t going to create havoc on asset value. That also means looking preferentially for positions that may not care too much abou
t what is happening in someone else’s backyard.

As trading opens on Tuesday, as much as I would like to get some weekly expiring positions there may be reason to look for opportunities to bypass the September 5th expiration and go straight to the September 12, although the extra week won’t offer too much additional advantage in the premium, as long as volatility remains at this low level. Further, with a fair number of positions already set to expire at the end of the September monthly cycle I really don’t want to add too many to that list and be put at undue risk by having so many vulnerable on a single day.

So with markets at new highs the challenge continues to be finding some that haven’t shared in the same glory, while not having any fundamental flaws to have deserved their fate.

In the meantime, I hope everyone has a happy and health Labor Day holiday and gets to enjoy an additional day of rest and relaxation.

 

 

 













 

 

 





 

     

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:   HAL,K, SBGI

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:  HAL (9/12)

Calls Rolled over, taking profits, into the monthly cycleCHK

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

Calls Rolled Up, taking net profits into same cyclenone

New STO:  BX, C, PBR, PBR, PBR

Put contracts expiredANF, BBY

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned:  C, TMUS, WFM

Calls Expired:   none 

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 PositionsHFC (8/25 $0.50 Special dividend), HFC (8/28 $0.32), K (8/28 $0.49), LO (8/27 $0.62), SBGI (8/26 $0.16)

Ex-dividend Positions Next Week:  COH (9/5 $0.34), MOS (9/2 $0.25)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BMY, CHK, CLF, COH, FCX, IP, JCP, LULU, LVS, MCP, MOS,  NEM, PBR , PFE, 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.