Aug292014

Week in Review – August 25 – 29, 2014

Week in Review

 

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 cycle: CHK

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

Calls Rolled Up, taking net profits into same cycle:  none

New STO:  BX, C, PBR, PBR, PBR

Put contracts expired: ANF, 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 Positions: HFC (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.



Aug232014

Weekend Update – August 24, 2014

Week in Review

For two consecutive summers back in 1981 and 1982 I found myself in Jackson Hole.

Although both times were in August, I don’t recall having run across any Federal Reserve types at the time. However, if they were there, they certainly weren’t staying in the same campground, but I’m guessing that their table was set much the same as mine, when big decisions in an era of 15% Fed Funds rates and the burgeoning money supply were being made.

Or maybe they were simply unwinding after a long day of exchanging white papers.

And not the type that are rolled, as good old fashioned Jackson Hole cowboys were reported to do. Too much exchanging of those rolled papers could definitely lead you into some kind of complacency. I know that I really didn’t care too much about what was going to happen next and was content to just let it all keep happening without my input.

This past week was one when neither decisions nor inputs were really required from investors as the market had its best week in about four months. With the exception of a totally inconsequential FOMC statement release, there was absolutely no economic news, or really no news of any kind at all. In fact, awaiting the scheduled remarks from Mario Draghi was elevated to the status of “breaking news” as most people were tiring of seeing celebrities getting doused with a bucket of ice, under the guise of being news.

In an environment like that how could you not exercise complacency? Going along for the ride has been a good strategy, just ask most hedge fund managers. While they, and I, were elated with the sudden spike in volatility just two weeks ago, talk of a 30% surge in volatility have been replaced by silence and sulking for them and justifiable complacency for most other investors.

Even though it was another in a series of Fridays with potentially unsettling news coming from Ukraine, this time regarding violation of their border by a Russian convoy, the market completely ignored the news, as it did the encounter of a US military jet with a Chinese fighter plane at a distance reported to be 20 feet.

That seemed odd.

Instead, all eyes were focused on the Kansas City Federal Reserve’s annual soiree in Jackson Hole, awaiting the keynote speech by Janet Yellen and then some words from her European counterpart, Mario Draghi.

For her part, Janet Yellen’s prepared remarks had no impact on markets, which were largely unchanged for the day.

The speculation that the real market propelling catalyst would come from Draghi, who was said to be ready to announce a large round of European quantitative easing turned out to be unfounded and so the week ended on a whimper, with many traders exercising their complacency by having embarked on an early start to the last of summer’s weekends.

While not going out in a blaze of glory markets again thrived on the lack of any news. In that kind of environment you can easily get used to the good times. With many believing that the Federal Reserve’s policies were responsible for those good times and having a “dove” at its helm, even with telegraphed interest rate hikes and an end to quantitative easing, auto-pilot seems so right.

Until it doesn’t.

As usual, the week’s potential stock selections are classified as being in Traditional, Double Dip Dividend, Momentum or “PEE” categories.

This week I’m drawn to summer under-performers and there appear to be quite a few among companies that can have a place even in very traditional portfolios.

^SPX ChartIn a world that increasingly seems dominated by technology and bio-technology, my initial thoughts this week are focused on heavy metal, although that may be a consequence of some neuron debilitating nights in Jackson Hole.

Deere (DE) announced further layoffs this past week and has been mired at $85 level. Despite record crop yields Deere has gone fallow of late. While I may still like to see it trading a little lower, it is definitely in the range that I like to own shares, not having done so since August 2013, despite it being a portfolio mainstay, at one point. While its premiums are somewhat depressed along with most everything else, at the moment stocks that have under-performed the S&P 500 for the summer have some enhanced appeal at the market’s current dizzying heights.

Although the question “how much further could it possibly fall?” is not one whose answer most people would want to hear, I like considering high quality companies that have under-performed, as the market adds to its own risk for reversal.

Also in the heavy metal business, General Motors (GM) has been subject to more scrutiny than most companies could ever withstand and I think its CEO, Mary Barra, has reacted and performed admirably, trying to get ahead of the news. In that process General Motors has also found itself mired, but trading in a fairly predictable range, having a nice option premium and an upcoming dividend offer reasons for consideration. However, in order to capture the dividend I may consider the use of a monthly contract, although expanded weekly options are available. With a Monday ex-dividend date, one can even consider the sale of a September 12, 2014 contract and trade off an extra week of option premium for the dividend, if assigned early.

International Paper (IP) may not be the stuff of heavy metal, but there is a chance that some of those white papers controlling our economic and banking policies were presented on their products. It’s also possible that some of those erstwhile cowboys passed an International Paper product along to their friends around the campfire, years ago.

At its current trading level, International Paper has my attention, although I do already own some more expensive and uncovered shares. Management has sequentially created value for investors through strategic spin-offs, which may continue and a healthy dividend. It, too, has under-performed the S&P 500 of late and should have limited geo-political risk, although it does have manufacturing facilities in Russia and “International” in its name.

It’s not too often that I think about adding shares of a Dow component or a really staid “blue chip.” However, despite some low option premiums that usually accompany such names, this week it just feels right, perhaps as somewhat of an antidote to geo-political risk.

Both McDonalds (MCD) and Kellogg (K) also happen to be ex-dividend this week and are generous in their distributions. Both have also taken their lumps recently, badly trailing the already mediocre S&P 500 through the first two months of summer.

While McDonalds isn’t entirely immune to geo-political risk, witness the sudden closure of its flagship Russian restaurant and others throughout the country, following the pattern initially seen in Crimea months ago, the risk seems to be limited, as the real issues are with declining American tastes for its products.

Kellogg quietly manufactures its products in 18 countries and markets them nearly everywhere in the world, yet it’s not too likely that anyone or any government will make Kellogg the scapegoat for its geo-political shenanigans. Although I’ve never purchased shares, it’s a company that I consistently look at in order to capture its dividend, but have always gone elsewhere to be requited.

This time may be different, though. The combination of under-performance, option premium and dividend, coupled with a little bit of a time buffer through the use of a monthly option contract provides some comfort at a time when the world may be a tinderbox.

Halliburton (HAL) also goes ex-dividend this week, but its puny dividend isn’t the sort of thing that beckons anyone to begin a chase. However, shares have recently been under attack. Although only mildly trailing the S&P 500 for the summer its decline in the past month has been 8%. That’s enough to get my attention in return for receiving an option premium and perhaps a dividend payment, as well.

Pfizer (PFE) is somewhat of a mystery to me. It is thought to have a relatively shallow pipeline of new drugs, has been rebuffed in its attempt to swallow up some competition and perhaps gain a tax inversion opportunity. The mystery, though, is why shares had fallen as they have done over the summer. Whatever disappointment existed due to the failed buyout was in excess of any premium that the market attached to that buyout and the favorable tax situation.

As with International Paper, I already own uncovered shares, but am willing to now add shares as it has shown the ability to bounce back from its recent lows. While its premium isn’t necessarily the most provocative, in the past it has been the ability to repeatedly rollover shares that has been the real reward.

You can add Blackstone (BX) to the list of uncovered positions that I hold, with the most recent contract expiring this past Friday. Undoubtedly, Blackstone’s prospects are tied to a healthy stock market and an overall healthy economy, as its varied business interests and investments are the real product and they live and die through the whims of both masters.

That’s the kind of risk that’s represented in its high beta and reflected in its option premiums. However, in this period of extraordinarily low volatility, even Blackstone is having a hard time generating premiums of old. Still, its recent decline, in the absence of any real news and during a market rise makes me believe that despite the warning signs, it may offer some safety, particularly if there is further strength in the financial sector, as in the past week.

I had been hoping to have my shares of Best Buy (BBY) assigned this past week, in order to have a free and clear mind when considering the upcoming earnings report this week. That wish was granted and its again time to consider a trade in shares.

Best Buy frequently offers a good earnings related trade due to its enhanced premiums, that in turn are due to its propensity for explosive earnings related moves. While the option market is currently assigning an implied move of 8% next week, an ROI of 1% can currently be achieved by selling puts at a strike level 8.7% below Friday’s closing price.

I generally like to see a larger gap between the implied volatility and the strike price returning the threshold premium before considering the sale of puts in advance of earnings. In this case, I may be more inclined to wait after earnings and willing to pile on if shares disappoint. However, with an ex-dividend date just two weeks later, rather than selling puts in the aftermath of a large share drop I might consider the purchase of shares and sale of call options.

Finally, what a roller coaster Abercrombie and Fitch (ANF) has found itself riding. After garnering the honor being named the “Worst CEO of 2013” shares have made an impressive turnaround.

I have no clue how suddenly its products could have become “cool” again, or why teens may now be flocking to its stores or what aggressive strategic changes CEO Jeffries may have implemented, but the sudden favor it has found among investors is undeniable, as shares have left the S&P 500 behind in the dust over the past month.

For me, that kind of share acceleration is a perfect message to consider the sale of puts as earnings are to be released.

The option market is implying a price move of 8.6%, however, a 1% ROI may be achieved at a strike level 13.8% below Friday’s close. That’s the kind of gap that I like seeing. However, as with Best Buy, there is the matter of an ex-dividend date, which happens to be on the same date as earnings are released.

If wanting to take part in this trade, that essentially leaves three different scenarios, including the commonly executed sale of puts before or after earnings. In the case of doing so before earnings the sal
e of puts in the face of an impending ex-dividend date frequently works to the disadvantage of the seller, much in the same way as selling calls into an ex-dividend date serves as a seller’s advantage.

That disadvantage is eliminated in selling puts after earnings, in the event of the share’s decline. However, another possibility, and one that would very likely include retention of the dividend, is the sale of deep in the money calls, particularly if using a monthly expiration. Additionally, if shares move higher after earnings, once the added volatility is removed the deeper in the money position may likely be closed at a small net price following concurrent share sales, allowing funds to be re-deployed.

Take that, complacency.

Traditional Stocks: Blackstone, Deere, General Motors, International Paper, Pfizer

Momentum:

Double Dip Dividend: Halliburton (8/29), Kellog (8/28), McDonalds (8/28)

Premiums Enhanced by Earnings: Abercrombie and Fitch (8/28 AM), Best Buy (8/26 AM)

Remember, these are just guidelines for the coming week. The above selections may become actionable, most often coupling a share purchase with call option sales or the sale of covered put contracts, in adjustment to and consideration of market movements. The overriding objective is to create a healthy income stream for the week with reduction of trading risk.

Aug222014

Week in Review – August 18 -22, 2014

Week in Review

August 18 – 22, 2014 

Option to Profit Week in Review
August 18 – 22,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
3 / 3 5 0 0  / 0 2  / 0 0

    

Weekly Up to Date Performance

August 18 – 22, 2014

New purchases for the week trailed the unadjusted S&P 500 by 0.1%, but beat the adjusted index by 0.2% during a week that the market had its best performance in about 4 months.

New positions opened this week went 1.6%% higher, however the overall market was 1.7% higher on unadjusted basis and 1.4% higher on an adjusted basis.

Performance of closed positions continued to out-perform the S&P 500 performance by 1.8%. They were up 3.7% out-performing the market by 93.2%. 

With really almost nothing having happened this week it turned out to be the 3rd best performing week of the year and the best in the past 4 months.

That’s generally not good news when you’re hedging your bets and most hedge funds are again looking at how to play significant catch up with the indexes, just as it had to do in 2013, although the overall climb this year has been much more subdued.

Last week was definitely one of those “left behind” kind of weeks that don’t happen very often. Given, however, how strongly the market climbed this week I was expecting to once again be left in the dust, but happily it didn’t work out that way.

What did happen was a fair number of assignments, which isn’t unusual when the market has a sharp climb higher. Fortunately, the week also saw the opportunity to develop cover on a number of positions, as well as being able to execute some rollover trades.

It was also nice to grab some more dividends, with even more expected next week.

Among those going ex-dividend next week is Holly Frontier.

It goes ex-dividend for its special dividend of $0.50 on Monday. Although shares closed at $51.26, there’s not much reason to expect that the September 20, 2014 $51 calls will be assigned early.

Those contracts will be adjusted down to $50.50 on Monday as the opening share price will be adjusted to $50.76 and then shares go ex-dividend for their regular quarterly dividend of $0.32 on August 28, 2014.

Complicated? Maybe, but if shares are above $50.50 on Wednesday at the close, because we’re dealing with a September 20 contract the chances of early assignment are reduced.

When putting it all together, the rejuvenation of cash, the option premiums and the dividends that will get deposited into the account, it was a bit of good fortune to be able to keep up with the broad market that would have been well appreciated last week, but at least this week wasn’t a duplicate.

As Friday’s trading session neared its close some of you may have noticed that I did something that I haven’t done in over a year, but may begin to do with more frequency if everything is aligned just right.

What I used to do on a fairly regular basis was to rollover contracts even if they were in the money and unlikely to expire. I did that rather than accepting assignment.

This week, with Whole Foods, came that opportunity.

The reason for rolling those shares over was related to having a fair number of positions already destined for assignment and not having very many positions scheduled for contract expiration next week.

Additionally, in this instance I wanted to grab the additional 0.8% net premium, rather than having to find another stock on Monday to take its place.

In a small way that decreases the need to find at least one replacement position at a time when there is so much uncertainty still in the air and the market is again at or right near new highs.

Given the continuing low volatility that means I’ll have greater leeway in selecting expirations for any new positions opened next week. Since the best premiums are still with the shorter term contracts and those premiums seemingly drop off of a cliff as going out much further, there won’t be the worry of being too heavily reliant on the outcomes of a single week.

Whenever there are too many positions set to expire on a single day I get a little nervous, because it doesn’t take too much to upset the apple cart and ruin some well laid plans.

Next week it’s almost like getting off to a fresh start, but with lots of money to do so and no real compelling requirement to spend, other than the desire to generate some income.

Fortunately, some of the positions going ex-dividend next week will relieve some of the need to look for other income streams and there may be some good reason to look at some very staid companies also going ex-dividend next week in order to supplement the existing dividends with some more and even some option premiums, to boot.

But that’s next week and that’s still so far away.

 

    

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:   CCL, WAG, WFM

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  WFM

Calls Rolled over, taking profits, into extended weekly cycle:  WAG (9/12)

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 cycle:  none

New STO:  EBAY, FAST, GM, HFC, HFC

Put contracts expired: none

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:  BBY, DD, DG, DOW, EBAY, MET

Calls Expired:   BX, LVS 

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: CCL (8/20 $0.25), RIG (8/20 $0.75). TGT (8/18 $0.52), WAG (8/19 $0.34)

Ex-dividend Positions Next Week:  HFC (8/25 $0.50 Special dividend), HFC (8/28 $0.32), LO (8/27 $0.62), SBGI (8/26 $0.16)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BMY, BX, C, 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.



Aug152014

Week in Review – August 11 – 15, 2014

Week in Review

 

Option to Profit Week in Review
August 11 – 15,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
5 / 5 1 6 3  / 0 5  / 0 0

    

Weekly Up to Date Performance

August 11 – 15, 2014

New purchases for the week trailed the unadjusted S&P 500 by 0.4% and the adjusted index by 0.2% during a week that the market was faced with no news and fairly inconsequential earnings reports, even with poor performance from DJIA components Wal-Mart and Cisco.

Of course, the lack of news changed abruptly Friday morning.

New positions opened this week went 0.8% higher, however the overall market was 1.2% higher on unadjusted basis and 1.0% higher on an adjusted basis.

After a few weeks in which existing positions significantly out-performed the market for the week by really unusually large amounts, this week was pay back time, as those positions fell by 0.1% in absolute terms, but fell a larger 1.3% in relative terms.

Performance of closed positions continued to out-perform the S&P 500 performance by 1.8%. They were up 3.9% out-performing the market by 96.6%. 

After the past few weeks of nice out-performance during a period of time that the market was either moving lower or flat, the market had its best week in the past six weeks. Or at least it was on that path until getting derailed by the news of a possible attack on Russian military vehicles inside Ukraine.

Up until that point the week was fairly abysmal, as is sometimes the case if the market moves higher by 1% as the likelihood is that a covered portfolio is going to lag the market.

As is also sometimes the case, the perversity of a covered option strategy becomes pretty obvious when you see your fortunes getting better when the market isn’t doing as well.

That was certainly the case at the depths of the day’s declines.

It was to the point that I had some disappointment as seeing recovery attempts. However, to be totally fair, it was the recovery that at least allowed some of the hoped for assignments to happen, just as the decline took some others away.

But while the decline was underway the gap between exisitng positions and the market was narrowing, so I didn’t mind that too much. They talk about corrections being “healthy,” and from my perspective the more covered positions I have the more healthy those kinds of backward steps are in the big scheme.

Even in the little scheme.

As is also the case, today was yet another good example of why nothing should be taken for granted. Although I wouldn’t, and didn’t, predict that today would have been the day for some kind of an event, the Ukraine/Russia/Crimea story has had a way of playing itself out on Fridays and that was something that I had already noted a few months ago.

Odd little coincidence, but I don’t really think that coincidence is at play.

While waiting each day for a nice pop higher, the week had very little activity, particularly the sale of new covered positions and in rollovers. Those are literally the bread and butter that help create an opportunity to beat the averages, but this week those opportunities were scant.

Fortunately some did appear today, but it was still a less than satisfying week.

Although a few assignments will help replenish cash reserves for next week, this week’s trading did absolutely nothing to inspire any confidence as looking toward next week.

Despite the comeback in the latter half of the day, that I could have done without, anyway, we are really on edge and subject to extraneous forces at the moment.

While some see opportunity in the unknown, I don’t mind the unknown that I know about. Things like earnings, same store sales, economic reports and even weather. Those a
re all fine. But when it comes to world events that can be manipulated and that occur at a moment’s notice, I’m not a big fan and neither is the market.

For lots of people there is lots at risk if they have been either actively or passively invested and there is a little bit of a feeling of helplessness when events take you by storm.

This Friday was an example of how quickly events can unfold, or even rumors of events.

We may find on Monday morning that the initial reports from Ukraine and not really verified by anyone may not at all have represented what occured or what may be nest to occur. But the fact that we react as we do is enough of a reason to be on the alert.

So with some cash still in hand and a decent number of positions set to expire next week, I’m not entering the week eager to add to new positions. I wouldn’t mind being a bystander, especially if the market moves higher and just watching existings hares go along for the ride.

What I would really like to see are some new covered positions established, as this week wasn’t terribly good for that and it showed in the bottom line. Some of those will represent rollovers that I elected not to make, as their cost was just too high, such as with Holly Frontier.

However, over the next few weeks there are a mumber of positions that will be going ex-dividend and while I do want to see them generate some option income I also don’t want to unduly put them at risk for early assignment because of the dividends. That includes General Motors and also Holly Frontier, so I’ll look at the possibility of using some expiration dates a week or more beyond the ex-dividend dates, as long as the volatility is there to create some attraction to the premiums.







 



 











 

 

 





 

     

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, DD, EBAY, SBGI, MUS

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  BBY, DD, DG, DOW, MET

Calls Rolled over, taking profits, into extended weekly cycle:  TMUS (8/29)

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 cycle:  none

New STO:  C

Put contracts expired: none

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:  CY, JPM, WFM

Calls Expired:   BMY, CHK, EBAY, FAST, HFC,

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: CLF (8/13 $0.15), DD (8/13 $0.47). IP (8/13 $0.35),

Ex-dividend Positions Next Week:  TGT (8/18 $0.52), RIG (8/20 $0.75)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BMY, C, CHK, CLF, COH, EBAY, FAST, FCX, GM, HFC, IP, JCP, LULU, 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.



Aug82014

Week in Review – August 4 – 8, 2014

Week in Review

 

Option to Profit Week in Review
August 4 – 8,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
4 / 4 3 4 4  / 0 3  / 0 1

    

Weekly Up to Date Performance

August 4 – 8, 2014

< strong>New purchases for the week trailed both the unadjusted and adjusted S&P 500 by 0.4% during another week of market losses, that were erased with Friday’s large gain. New positions actually lost ground for the week, in sharp contrast to the portfolio of existing open positions which again performed very strongly. 

Following a week with lots of extraneous events that shaped the market’s behavior this week wasn’t very different, as there was really no economic news of interest and no market rattling earnings surprises.

New positions opened this week went 0.1% lower while the overall market was 0.3% higher on both an unadjusted and adjusted basis.

Existing positions again significantly out-performed the market for the week by a large 0.8%. That sort of out-performance is larger than you might expect from the impact of option premiums, but there were no real performance standouts for the week, as was seen the previous week when Family Dollar Stores was part of the equation.

Existing positions actually showed an overall gain of 1.1% for the week, as compared to the market gain of 0.3%. 

Performance of closed positions out-performed the S&P 500 performance by 1.8%. They were up 3.7% out-performing the market by 94.5%. 

It seems as if it has been a while since I’ve had anything good to say about the market.

On a positive note it often works out better that way and this was another week where the bottom line showed improvement and out-performed the broader market by a surprisingly large amount, despite not having any real superstar performers.

The disappointment, and you always have to look for those, was that not enough new covered positions were created and not enough positions were rolled over. The surprising strength on Friday helped to ease some of that disappointment, though, with some additional rollovers and even another new covered position created.

The week ended the way it began.

It was a week that began with some surprising promise with Monday showing a nice gain after last Thursday and Friday’s large losses.

But it was all illusory, as the market deteriorated for most of the rest of the week as the “experts” initially disagreed as to whether it was technical factors being the root cause of international events.

The market then staged an improbable rebound as it seemed to respond news that was was already known, regarding the scheduled end to Russian military exercises on the Ukraine border, as if that actually means anything.

Ultimately, though, none of that really matters.

Whether it’s technical, international uncertainty, lots of rollovers, casino weakness in Macao and all of those other things that are happening. None of it really matters, other than the bottom line.

The truth is that I do like the means and not just the ends, but ultimately no one really cares about the path or the factors.

There was so much news last week and so little expected this week, yet once again we were hostage to quite a bit of the external factors that create fear and uncertainty.

How and why Friday was able to escape from that uncertainty will be a m
ystery, at least to me, but a welcome mystery.

Happily, there were some assignments this week and a few rollovers and even a couple of new covered positions created.

That means that next week there is some cash available and after some of the drops of this week there really do appear to be some bargains to be had, even after a day or two of recovery.

That’s always a good combination, but as with some previous weeks I don’t think that I’ll be too excited about aggressively going into the market to add new positions, but at least there’s both the will and the way to do so.



 



 











 

 

 





 

     

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:   CY, JPM, LVS, MET

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  JPM, WFM

Calls Rolled over, taking profits, into extended weekly cycle:  CHK (8/29), LVS (8/22)

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 cycle:  none

New STO:  BX, EBAY, DOW

Put contracts expired: none

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:  EBAY ($52.50), EBAY ($53.50), GPS ($40), GPS ($42)

Calls Expired:   C, CHK, PFE

Puts Assigned:  none

Stock positions Closed to take profits:  LB

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions: MET (8/6 $0.25), WLT (8/7 $0.01)

Ex-dividend Positions Next Week:  CLF (8/13 $0.15)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BX, C, CHK, CLF, COH, DOW, EBAY, FCX, GM, IP, JCP, LULU, 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.