Diversion

Sunday, March 9, 2014

Belated February 2014 Results

(Note:  My laptop died at the end of February. I just ordered a replacement battery, but for now I am behind on posts because I don’t have access to my spreadsheet files and blog post templates. I am trying to partially catch up with February results today and a few recent posts, as I rebuild my spreadsheet files.  I’m hoping that the repair is just a replacement battery – if so, I’ll be sure to back up in the future!) 

Here we are again with the market incomprehensibly surging to new highs during global chaos and tepid economic news.  It reminds me that Warren Buffet and others have said that good news or bad, the stock market rises in the long term.  So even though I have only about 70 percent of Rescue My IRA in stocks right now, I’m staying in the market with this account and will continue to use my covered call approach.

Last month I wrote that I was beginning to move my sidelined $50K or so into stocks, because it looked like we were in the middle of a pullback.  The market didn’t continue in that direction, so I am again at just more than $50K in cash reserves, waiting for a pullback, and I will go in up to 90 percent when the time comes.  Despite the fact that cash reserves are high, Rescue My IRA closed at a record high value for February, while also achieving my goal of 1 percent monthly return between call premiums, dividends, and stock gains.

Two positions were closed last month, one unwound and the other called away:  SO and FB.   These generated more than $1,300 in stock gains, while the account generated another $600 in dividends and call premiums. 

Here is a summary of my Rescue My IRA statistics for February 2014, based the February 28, 2014 close.    

Account Status:
·         Total Account Value, 2/28/2014 Market Close:  $157,816.52 (vs. January close of $154,240.10)
·         Total Cash Reserve, 2/28/2014 Market Close:  $51,993.69
·         Core Stock Positions (as of 2/28/2014):   ABT (400 shares), CAT (100 shares), CRUS (400 shares), FB (200 shares), GLW (600 shares), IP (200 shares), KO (400 shares), PFE (300 shares), PSA (100 shares)

Performance Metrics:
Option Premiums Collected (net, month of February):  $393.62 (0.25%)
Capital Gains Collected (net, month of February):  $1,313.18 (0.85 %)
Dividends Collected (recognized on the ex-date): $208.00 (0.13%)
Interest on Cash Reserve (laughable): $0.38
Total, Absolute Return:  $1,915.18 (1.24% absolute return, 14.87% annualized return)

Next Month To-dos:

March is a month where the dividends will be paltry as they were in February, and at the time of this writing, there’s not much to speak of forecast for stock gains either.  Assuming the two in-the-money positions KO and PSA are not assigned, Rescue My IRA will net $262.00 in dividends and may show a net loss on gains if I don’t repair the KO position.  The other call due this month is ABT, which will net nearly $300, but the loss on KO would offset this.

Looking ahead, there are four positions with April contracts, and two with May contracts.  To fix KO, I will likely have to set up an August contract; I also have PSA sitting out there with a September contract, so these are further out than I normally would like – but if the positions are profitable, I suppose I can’t argue with that.


Hopefully I’ll have my spreadsheets and other records backed up by the end of March, and can write a more effusive monthly post.  Until then, happy trading!

1 comment:

  1. Great documentation of a solid covered-call plan!

    ReplyDelete