Sunday, November 2, 2014

Rescue My IRA: October 2014 Results

When I was writing the September update, there were signs we’d have a choppy month during October.  That’s certainly what happened – mid-month the market was down by between five and ten percent, but it has since recovered.  Despite the forecasts, I stuck with the covered call strategy, and here at month’s end, I find that the value of my account has held up.

It’s been a good trading month between taking gains on AAPL in my recent “unwind” trade, rolling out the October covered call contracts that were out of the money, and opening some new positions now that October is behind us.  I hope that November is as good – I have quite a few contracts that expire this month, so as usual, I’ll be busy.

Meanwhile, here is the monthly summary of Rescue My IRA statistics for October, based on the market close on the 31st

Account Status:
·        Total Account Value, 10/31/2014 Market Close:  $ 166,725.42, that’s up slightly from the October close)
·        Total Cash Reserve, 10/31/2014 Market Close:  $44,964.42
·        Core Stock Positions (as of 10/31/2014):  BA (100 shares), CNP (400 shares), COP (100 shares), CRUS (400 shares), DIS (100 shares), EMC (400 shares), FB (100 shares), GE (300 shares), IP (200 shares), KRFT (100 shares), PFE (300 shares), QCOM (100 shares), T ( 300 shares), TGT (100 shares)

Performance Metrics:
·         Option Premiums Collected (net, month of September):  $1,024.11 (0.66 %)
·         Capital Gains Collected (net, month of September):  $1,320.77 (0.85%)
·         Dividends Collected (recognized on the ex-date): $ 263.50 (0.17%)
·         Interest on Cash Reserve: $0.30
·         Total, Absolute Return:  $2,608.68 (1.69% absolute return, annualized return

Next Month To-dos:

In November, there are five positions with covered calls that will expire:  FB, IP, PFE, QCOM, and TGT.  Only two of them are in the money as I write this – IP and TGT, but if all of them are called away they will generate about $600 in gains for a 0.39% return on the account value.  That result will be halved if only IP and TGT are called away.

The dividends forecast for November is much better than it was for October:  BA, CNP, PFE, IP, TGT, and QCOM all have upcoming ex-dividend dates.  The total payout could be as high as $420, for a 0.27% return.  If IP and TGT are called away on their ex-dates, that return will be reduced by a third, and if PFE and QCOM end up in the money by their ex-dates, the dividend income will be reduced even further.  We’ll see how things turn out.

Based on these calculations, I’m looking at a month where I can account for about half of my goal of generating one percent per month is accounted for, although if I take the in the money status of IP and TGT into account we’re only a third of the way there.  So there’s plenty of work to be done trading covered calls!

All in all, this is a pretty satisfactory result for the rough seas of October.  Rescue My IRA will stay the course with the covered call strategy.   

Until next month, happy trading!

1 comment:

  1. Nice job, Jim. I haven't been able to achieve the 1% per month goal. That would be a victory! Keep cranking!