October 2012 Results

As I expected it to be, October was a challenging month during the account.  The market has been bouncing along at high values, but we have all of these reasons to doubt that the current levels are sustainable.  I found it difficult to complete new profitable trades, although I was able to collect some dividends and did generate some cash from buying and selling covered calls.  But there were no call assignments and no capital gains – all in all, it was just a breakeven month. 

Here are the statistics for October 2012:

Account Status:

·         Total Account Value, 11/1/2012 Statement:  $127,568.73, a value that is close to the January 1 value of $127,606.44.

·         Total Cash Reserve, 11/1/2012 Statement:  $6,605.73 (Fascinating!  Exactly $3.00 more than last month!)

·         Core Stock Positions (as of 11/1/2012):   CAT (100 shares), CSCO (400 shares), CSX (500 shares), DOW (300 shares), F (400 shares), GLW (700 shares), HAL (300 shares), HPQ (400 shares), ITW (200 shares), MSFT (300 shares), SWK (100 shares), SPLS (700 shares), URS (400 shares), WAG (300 shares)

Performance Metrics:
Option Premiums Collected (net, month of October):  -$90.84
Capital Gains Collected (net, month of October): $0.00

Dividends Collected (recognized on the ex-date): $128.00
Interest on Cash Reserve (total): $0.08
Total, Absolute Return:  $37.24
Absolute Return, Percentage Basis:  0.03%
Annualized Return, Percentage Basis:  0.36%

Next Month To-dos:

As a dividend month, November will similar to August, which was a good month.  Five positions will go ex-dividend this month:  CSX, GLW, HAL, MSFT and WAG.  I will collect $311.50 from dividends, meaning I need to make up $900 or so to make my 1% return goal.

As of this writing there is only one position with a November contract – 400 shares of F at a 10 strike, a position that is in the money.  It won’t earn a gain if the stock is called away, I designed the trade to make money basically at the purchase price based on the option premium and dividend that I have already collected.  So it looks like I’ve got my work cut out for me on the covered call buying and selling side.

I’ve taken advantage of down market days over the last two weeks and closed some of the options – so at some point during the month I hope to be able to sell new contracts and thus will begin to generate some income. Plus, assuming the F shares are called away, I’ll have about $4,000 to make a new position with…

I’ll keep you posted.