Wednesday, March 7, 2012

February 2012 Monthly Recap

I just got my statement for the Rescue My IRA account so here’s a recap of trading results for February 2012.  As with previous months, the monthly recap is loosely organized into the following sections:  account status, performance metrics, and a to-do list for the next month.

As is the case for the remainder of this year, the calculation of my ROI percentage is based on the statement valuation of the account at the end of December 2011, which was around $127K.  It remains 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 – and February was a month where good progress was made!

After February’s experience, I can confirm that I have found it challenging to make optimal trades in this toppy market.  I predict that March 2012 will be much more challenging, as we have already seen some settling back from market highs...based on options set to expire this month and currently looking like they will be assigned, forecast dividends, and options activity to date, I may fall short of the monthly goal by $200-$300, but I will continue to work on it.

I have always been able to turn a profit on each trade I've made, but I am finding that my goals at establishing positions - $100 in cash back off of the first option transaction and the expectation of an annualized return of better than 12% has definitely help me back off from some trades.  That is the true value of my trading plan.  

I have enough experience in the market now, after six months or so with this account, that I know I am okay with most of my current positions - as long as I remain careful, prudent, and true to the trading plan.

That said, February turned out to be a good month for the Rescue My IRA account.  Here are the results:

Account Status:
Total Account Value, 2/29/2012 Statement:  $131,877
Total Cash Reserve, 2/29/2012 Statement:  $18,724
Core Stock Positions (as of 2/29/2012):  ACM (800 shares), COP (100 shares), CSX (400 shares), DIS (200 shares), GE (500 shares), GLW (700 shares), ITW (200 shares), NOC (200 shares), NVS (100 shares), SPLS (500 shares), TGT (100 shares), T (300 shares), WAG (200 shares)
Performance Metrics:
Option Premiums Collected (net, month of February):  $973
Capital Gains Collected (net, month of December): 1,455
Dividends Collected (recognized on the ex-date): $683
Interest on Cash Reserve (estimated total): $1
Total, Absolute Return:  $3,111
Absolute Return, Percentage Basis:  2.44%
Annualized Return, Percentage Basis:  29.66%

Next Month To-dos:
Two of the current positions go ex-dividend during the month of March, but none of them are likely to be called early on the ex-date:

·         ITW on 3/28 (there is an April call on this position)
·        SPLS on 3/21

There are only two covered call contracts currently forecast to expire in March (both are in the money): 
·         DIS 42 (x2)
·         TGT 52.50 (x1)

As in the past, as options expiration approaches I will take a look at deltas and see what is likely to be called away.

Consolidated Lessons Learned:

NVS Dividend Grab:  I moved pretty hastily to capitalize on the annual dividend for this stock.  In hindsight, it wasn’t a good idea to rush to pull the trigger.  I failed to include the price reduction for the shares that occurs on ex-dividend date…in this case, because of the annual dividend, it was substantial.  While I’ll still make a profit, it is below my goal for Rescue My IRA.  I’ll carefully manage the position and see what I can do to improve the situation. 

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