Like many of my generational colleagues, the baby boomers, I've found that my best intentions about saving for retirement aren't always meeting the mark. In 2011, I took some old 401(k) accounts and combined them into a self-directed IRA with Scottrade, and established a strategy of using covered calls to stabilize and enhance my returns. Rescue My IRA chronicles the progress of my IRA rescue using this approach.
Friday, November 29, 2013
Even with the holiday shortened trading week,
there has been a lot of activity in the Rescue My IRA account so far. In fact, yesterday alone, I did four
roll-outs, netting about $400 in cash from the premiums. Because of the holiday and how busy I’ve been
so far, I’ll just list those four symbols today so I can get on with the topic
of this post, the recent unwinding of my TXT position: PSA, INTC, F and FB.
The trading week started out tentatively, but
we’ve ended up setting new highs for three consecutive days. The articles I am reading are evenly split
between their anticipation of a traditionally great month during December and a
looming correction in the range of 10-20%.
Since I can be as wrong as any of the experts, I am going to hold
off on new positions during the month
and let the contracts I have in place take care of themselves – there are still
four December positions, even with the four roll-outs listed above.
One action I did take was to unwind my TXT
position – there was an odd situation with the covered call premium once the
delta reached 1.00, and I decided to close it out to get some cash off the
table. I did this even though TXT will
go ex-dividend early next month. The
dividend is only $2.00; I decided that getting the cash in was more prudent
than waiting to see what the market is going to do this month.
This was the second time I’ve taken a bite of
TXT, it’s an S&P 5 star stock. I
held the previous position for 50 days; it also exceeded my goal of a 12% annualized
return – that time it achieved a 24.83% annualized. Even so, comparing the actual returns between
the two positions, this one did a little better – 3.89% vs. 3.40%.
So here is the record on the TXT position, net
of fees and commissions – it was an excellent performer, once again:
This was a 300 share
position an average price of $29.30, total position basis $8,791.00
Sold on unwind at $9,742.83
income: -$610.03 (due to unwind transaction)
Net Profit: Total Net Profit after
Absolute Return on Investment: ($341.80/$8,791.00) = 3.89%
Annualized Return (75 days): 3.89%*(365/75) = 18.92%