Monday, January 7, 2013

2012 Retrospective, Top Five Trades Part 2

In yesterday’s post, I highlighted three of what I consider my Top Five Trades of 2012.  Today’s post features the final two of those trades, and this is the final of my 2012 year-end retrospective posts.  It’s already been a busy month for trading and I have some results that I will be sharing soon.  In the meantime, here is a recap of some my IP and DIS trades, stocks I’ve held a couple of times over the course of the Rescue My IRA trading history.

Another Hat Trick with IP

There is a stock that I learned about on the Yahoo Covered Calls board – I get a lot of ideas from there and I have learned a lot about covered calls investing from the people who post there.  In the case of IP, I have been able to take a position in the shares several times and consistently come up with a hat trick or triple play, where the total return includes covered call premiums, dividends, and stock gains.

That was the case again in August 2012, where I had sold covered calls on 300 IP shares at a strike price of $33.  I ended up with the shares for 30 days this time and collected dividends in the process.  Here’s the history of this most recent position:

IP – 300 Shares, average basis $32.02, 33 Aug 2012 assigned
Option Premiums (total):  $140.23
Dividends Collected (ex-dividend 8/13/2012:  $78.75
Stock Gain:  $275.89
Total:  $494.87
Absolute return 5.15%
Annualized return (30 days) 62.67%

Quick Hit on DIS
I’m finding that over the course of a year there are several stocks that I establish positions in a few times during the year, DIS being one of them.  Now the jury is still out as to whether entering and exiting these positions is as efficient and effective as a more traditional buy and hold strategy – but I suspect that I get a little more control with the covered calls and in the long term should do better by a few points.  We’ll see…

In any case, the final trade I’d like to highlight in this Top Five series is a March 2012 DIS position that I established with 200 shares.  This one was another quick turnaround trade – February had been a month with a lot of call assignments and DIS was one of the positions I established with the proceeds. 

I ended up holding DIS this time for about 30 days.  I didn’t earn the hat trick, but I did collect both covered call premiums and a stock gain, for an absolute return of 2.13%.  Here’s the analysis of that trade:

DIS – 200 Shares, basis $41.64, 42 MAR 2012 assigned
Option Premiums:  $122.49
Dividends Collected:  $0.00
Stock Gain:  $55.00
Total:  $177.49
Absolute return 2.13%
Annualized return (30 days) 25.93%

So, that’s a wrap of the 2012 retrospective posts.  Overall, I’d call the year a success – even though I didn’t achieve my goal of earning 12 percent on my investments, I did have a positive return overall, and I learned a lot.  I like the approach and I will keep using it, applying what we’ll now call “wisdom” in the hopes of improving my returns next year.
Here’s to a successful trading year in 2013!


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  2. Very nice synopsis of your 2102 results and highly educational. Thanks for posting!