Thursday, October 17, 2013
Taking the Hit on TGT
I use a portfolio approach, typically holding 12 to 16 positions in the Rescue My IRA account at any given time. By doing this, I can manage a losing position here and there, because it will usually be offset soon by a winner, and by the steady performance of most stocks that will yield my goal of 12% per year.
My TGT position was one of the losers this year – I like the company and the stores, I’ve held it successfully in the past, and it gets a high S&P rating. But the position I started in August went into a tailspin almost immediately, and I saw that I was rolling it down on a monthly basis. Earlier this week I cut my losses, unwinding the covered call contract and then selling the shares.
I’ll show a loss on this one, but I expect to offset it fairly quickly with a new position.
Here’s the analysis:
August 2013 – Bought 100 shares for $7,079.99.
Per share basis of 100 shares is $70.80.
Total Option Premiums: $137.96
Total Dividends: $43.00
Total Stock Loss: -$783.09
Total Absolute Gain/Loss on the position: -$60.13
So my actual loss on this position works out to -8.50%. I’m glad I pulled the trigger before I was down 10%.