November 2013 Monthly Results

Trading activities in Rescue My IRA last month were successful.  The value of the account held at above $152K for the second month in a row, so I’m pretty happy about that. Also, there were a couple of trades that have ended up well – I use a 1% monthly gain as a target to proxy the income I will be able to draw from this account when I retire, and this month I hit the target.

There were three trades that I unwound at a profit, meaning I bought to close the covered call contract and sold the underlying.  Not counting these, I had at least 10 adjustment trades or “STOs.”  November was a good month for dividends to, with more than $500 in income recorded for this source.

There’s a lot of talk about maybe a bubble in the market.  Sure, there is always the chance of a correction and consolidation at any given moment, and while I am ignoring statistics and probability, this might be a good time for it after those successive record closes at the end of November.  But to be frank, I think that is a lot of BS just meant to scare away small-time investors such as myself so that the big guys can steal our money.

I’m thinning out the portfolio here during December – four or five contracts are due and they are in the money or close.  I expect to end the month in a 25-50% cash situation while I reconsider my strategy, which I promised myself I would do once the account was valued at above $150K.

That’s a good benchmark, by the way.  Back in 2007, the value of the three legacy accounts that I combined in a Merrill Lynch IRA was $144K – the covered call strategy has made me whole and then some over the last two years.  I am looking forward to what the future holds.

Here is a summary of my Rescue My IRA statistics for November 2013, based on last Monday’s close, December 2, 2013.     

Account Status:

·         Total Account Value, 12/2/2013 Market Close 152,928.16:  $ (vs. October close of $152,733.17)

·         Total Cash Reserve, 12/2/2013 Market Close:  $24,133.40

·         Core Stock Positions (as of 12/2/2013):   CAT (100 shares), DIS (200 shares), F (500 shares), FB (100 shares), INTC (400 shares), IP (200 shares), KO (400 shares), MAT (200 shares), MRK (200 shares), PSA (100 shares), WFC (300 shares)

Performance Metrics:
Option Premiums Collected (net, month of November):  -$1,584.46 (-1.19 %)

Capital Gains Collected (net, month of November):  $5,094.27 (3.83%)

Dividends Collected (recognized on the ex-date): $546.50 (0.46%)
Interest on Cash Reserve (estimated): $0.19
Total, Absolute Return:  $4,056.50
Absolute Return, Percentage Basis:  3.05%
Annualized Return, Percentage Basis:  37.15%

Next Month To-dos:

There’s not a lot of dividend activity scheduled for December, with only DIS, MRK, and PSA scheduled.  The forecast says that would yield $378.00 or 0.28% for the month if it held – but DIS and MRK are both in the money with ex-dividend dates before the December contracts expire, so I am likely to be called early…as a matter of fact, I designed the trades that way, and these trades will yield about $500 in capital gains if they are assigned.

As I mentioned above, I am going to slow down the activities in this account this month while I do some research on augmenting the covered call strategy.  Obviously I will continue to post my trades.

The holidays are here – here’s to a great season, readers!