When presented as an ROI percentage, the returns for this month (and for the remainder of 2012) are based on the statement valuation of the account at the end of December 2011, which was around $127K. To keep an element of anonymity to the blog, I generally post balances in rounded numbers – and honestly, it is too much work to calculate any kind of average daily balance and other approaches to valuation, even thought those would be technically correct!
One thing is consistent; it is my big-ass goal for this money is to generate 12% growth per year in the account that is about $15K per year in monetary terms.
Most of my colleagues in the covered call community are discussing the difficulties with finding good trades in this market, which is being called “toppy.” We could see an upturn as the economy is apparently improving, but we could also see some stabilizing here, and even short-term declines as the market continues to prepare for the next stage of growth. The good news is that the covered call strategy is as good as any other approach to investing, given these conditions.
Total Account Value, 1/31/2012 Statement: $130.168.92
Total Cash Reserve, 11/30/2011 Statement: $22,635.20
Core Stock Positions (as of 1/31/2012): ACM (800 shares), COP (100 shares), CSX (200 shares), DRI (200 shares), GE (400 shares), GLW (400 shares), HAS (200 shares), HRS (200 shares), IP (200 shares), MSFT (400 shares), SPLS (500 shares), TGT (100 shares), T (300 shares)
Option Premiums Collected (net, month of January): $426
Capital Gains Collected (net, month of December): $1,011
Dividends Collected (recognized on the ex-date): $278
Interest on Cash Reserve (estimated total): NM
Total, Absolute Return: $1,715
Absolute Return, Percentage Basis: 1.34%
Annualized Return, Percentage Basis: 5.45%
Next Month To-dos:
Five of the current positions go ex-dividend during the month of February, and several of them are likely to be called early on the ex-date:
Consolidated Lessons Learned:
Adjustment to GE: I took the step of moving up the GE June position to February. There was a tradeoff, since the option I bought back was ITM and the new on was ITM, but overall, I will still see a gain that totals $750 on this trade, nearly 12%, and annualized to about 47%. This kind of trade is an exception to my usual approach, but I figured that the position was dead money for three months if I let it ride (although I would probably pick up at least one more dividend payout). The trade is profitable overall, but I did give up around $200 in call premiums.