Thursday, March 28, 2013

March 2013 Results - a Few Days Early

For much of the month of March the stock markets have been bouncing around at near record levels.  Finally, on the 28th – the last trading day of the month and quarter, the S&P closed at a new high, above levels that haven’t been seen since 2007.  That’s saying something.

We’ll have to watch and see if this is sustainable; I suppose it would be typical to see some retrenching here and consolidation, after which we’ll see what direction the market will head.  Is the economy at a place where we anticipate continued growth, or have we reached the end of this much too slow expansion?  I’m going to continue trading covered calls with my trading plan in any case – it lessens my downside risk and seems to be meeting my goals for the Rescue My IRA account.

Since the markets are closed for the month now, I will go ahead an report my monthly results a few days earlier than normal.  Like February, March was a steady month, with revenues coming from all three sources:  covered call premiums, dividends, and stock gains. 

My URS covered call position was assigned in two transactions, resulting in a stock gain of $138.64.  Inexplicably, half of the 400 share position was claimed on the stock’s ex-dividend date and the other half a few weeks later, meaning I had to pay two commissions on the transactions.  Of course, the shares were solidly in the money the whole time, which made this outcome even more perplexing – but hey, I’ll take those dividends on the 200 shares that weren’t called away, and they more than make up for the commission on the extra trade! 

In February, Rescue My IRA collected $287 in dividends on five positions.  March was an even better month with six positions going ex-dividend, including the URS shares discussed above.  All totaled, I collected $379.50 in March. 

At the beginning of March, I didn’t expect to do a whole lot of trading in options.  I only ended up making seven trades, which is probably a lighter schedule than normal, but I ended up netting about $1,040 in premiums.  It’s a kind of benchmark for me to hope for the opportunity to collect $1,000 from premiums in any given month, and so March was a success on this account as well. 

So, finally, here are the Rescue My IRA statistics for March 2013, as of the 3/28/2013 market close:

Account Status:
·         Total Account Value, 3/28/2013 Market Close:  $139,988.24 (vs. February close of $137,194.43)
·         Total Cash Reserve, 3/28/2013 Market Close:  $9,910.74
·         Core Stock Positions (as of 3/28/2013):   AFL (200 shares), CAT (100 shares), CMI (100 shares), CSCO (500 shares), CSX (500 shares), DOW (300 shares), GLW (700 shares), ITW (100 shares), JPM (300 shares), MRK (200 shares), MSFT (400 shares), SPLS (700 shares), UNH (200 shares)

Performance Metrics:
Option Premiums Collected (net, month of March):  $1,038.67
Capital Gains Collected (net, month of March): $138.64
Dividends Collected (recognized on the ex-date): $379.50
Interest on Cash Reserve (estimated): $0.08
Total, Absolute Return:  $1,556.89
Absolute Return, Percentage Basis:  1.17%
Annualized Return, Percentage Basis:  14.26%

Next Month To-dos:

April is a light month for dividends, with $212.00 forecast.  The positions going ex-dividend during April are CAT, CSCO, and JPM – all of which have May covered calls written against them, so there probably won’t be early assignments on them.

Of the seven covered call trades I made during March, several of them were roll-outs of April contracts to May.  As a result, I only have three positions with April contracts, all of which are either in the money or very nearly in the money.  The in the money contracts are ITW with an Apr 60 and MRK with an Apr 44.  The almost in the money contract is UNH with an Apr 57.50. 

These positions were all written with healthy stock gains in mind.  If all of them are assigned during the month, the total gains will be about $945, so between the stock gains and dividends I will have nearly met my goal for the account’s monthly return of one percent.   That would be a good thing.

So, until May, those are the results.  Here’s to another green month!

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