Sunday, November 8, 2015

Rescue My IRA: October 2015 Results

A combination of activities has kept me away from posting regularly over the last few months, but I have kept up my trading activities in Rescue My IRA.  I’ll see if I can do better going forward, but in the meantime, here are my monthly results for October 2015.

The market’s big news of late was the correction that began in July and now seems to be behind us.  At one point, Rescue My IRA had a statement value of less than $160K, which meant for a time all the growth in the account since 2014 was eliminated in the correction.  By October 31, the account was approaching $170K, so those paper losses had been made up and we are in the black for 2015.

On the account maintenance front, I did take some measures to protect capital and trim up some of the positions in the portfolio.  I had been working towards growing the cash reserve starting in July, but the correction moved too fast for me to fully meet my goal of getting 40-50% into cash; I made it to 25%, which was more than I have held in cash for 18 months or so.  I’m also holding steady at 12 positions in play, at the low end of my typical range of from 12 to 16. 

Notable transactions during October included doing a wash sale (see the post here) on my DDD position, trading it into competitor LXK.  Also, I unwound and sold the EMC position – the company was purchased by Dell, but the market didn’t like the terms and the EMC shares were declining prior to the merger close, so I decided to put those resources back into cash instead of waiting for resolution.

All in all, an interesting month, one of several during this correction.  For the most part I kept the faith with my shares, only making changes in certain circumstances such as DDD and EMC.  I ended up with trading losses for October, but despite that, the recovery brings the account into positive territory for the year, and we’ll see how we do in the remaining two months.

Here is a summary of benchmark results for October 2015 – as always, these amounts are net of commissions and fees.  I will resume comparing monthly results with the November post.

Account Status:
·         Total Account Value, 10/31/2015 Market Close:  $169,015.51 – recovering from the correction, and once again above the account’s 2015 starting point of $167,659.68.
·         Total Cash Reserve, 10/31/2015 Market Close:  $40,283.41 – just less than 25%, currently evaluating an appropriate level given the market recovery.
·         Core Stock Positions (as of 10/31/2015):  AAPL (100 shares), CSCO (500 shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GE (500 shares), HPQ (400 shares), LXK (200 shares), MSFT (200 shares), NUE (200 shares), SPY (100 shares), XRX (500 shares)

Performance Metrics:
·         Option Premiums Collected (net, month of October):  $621.20 (0.37 %)
·         Capital Gains Collected (net, month of October):  -$5,141.15 (-3.17 %)
·         Dividends Collected (recognized on the ex-date): $105.00 (0.06 %)
·         Estimated Interest on Cash Reserve: $0.28
·         Total, Absolute Return:  -$4,414.67 (-2.63% absolute return, annualized return not estimated) 

Next Month To-dos:

November is a poor month for dividends, but not as bad as October.  AAPL, LXK, and MSFT have ex-dividend dates, and I expect to collect $196.00, or 0.12% return, if the shares are not called away.  At the time of this writing LXK has a November contract in-the-money, so there is a chance it will be called, reducing the dividend returns by $72. 

The forecast of covered call contracts set to expire this month include an FB and LXK.  I have already rolled the FB position out and up, from a $97.50 strike to a $100 strike, and from a November contract to a January covered call.  LXK was the wash sale trade from DDD – I’m inclined to let these shares be called away, and even if the dividend is taken from me that trade will earn $338, or 5.37% over the one month duration – it’s a small piece of the DDD loss, but quite satisfactory as a trade.

I don’t expect a lot of trading activity for the balance of the month, since there is only one November contract left.  December promises to be busier, as I have seven contract set to expire then.  There is the matter of determining where I’d like to be on cash reserves, so I may choose one or two new positions during November, but I’m not ready to pull the trigger on that yet.

That’s it for the October update.  Until next month, happy trading!