Saturday, February 13, 2016

Rescue My IRA: January 2016 Results

It’s likely that no small trader is having fun in this market – and like many of those accounts, Rescue My IRA is down from the year’s starting point, notching in at -4.6%. That’s actually better than the market benchmarks – the S&P 500 (all Rescue My IRA stocks are drawn from there) is down -8.77%, and 80% of the DOW 30 stocks are down year to date. 

I’m very comfortable with the level of risk that we have in the account – there are 14 positions in play, so the portfolio effect will protect us from significant losses.  Some of the shares show paper losses, but my plan is to keep rolling them out through the course of this correction.   We also still have a few that are in the money with the possibility of being called away for a gain, so we can take comfort in that.

As far as trading returns for the account go, between dividends and covered call premiums, we were able to generate cash returns of $300.98, or 0.18%, during the month, based on the account’s starting value for 2016.  Actually there were no stock sales this month, which may be a first for the account, which began in October 2011!

Here is a summary of benchmark results for December 2015 – as always, these amounts are net of commissions and fees. 

Account Status:
·        Total Account Value, 1/31/2016:  $159,952.67, which is down from the December 31, 2015 close of $167,609.77.
·        Total Cash Reserve, 1/31/2016:  $40,750.30, or about 24%; that’s up from last month’s balance of $40,173.77. 
·        Core Stock Positions (as of 1/31/2016 – no changes this month):  AAPL (100 shares), CMI (100 shares), CSCO (500 shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GM (200 shares), IP (200 shares), JPM (100 shares), NUE (200 shares), QCOM (100 shares), SBUX (200 shares), SPY (100 shares), XRX (500 shares)

Performance Metrics:
·        Option Premiums Collected (net, month of January):  $152.64 (0.09%)
·        Capital Gains Collected (net, month of January):  $0.00 (0.00%)
·        Dividends Collected (recognized on the ex-date): $149.00 (0.09%)
·        Interest on Cash Reserve: $0.34
·        Total, Absolute Return:  $300.98 (0.18% absolute return, estimated annualized return 2.15%) 

Next Month To-dos:

There are five positions with dividends during February:  AAPL, CMI, IP, QCOM, and SBUX.  If all are collected, the account will receive $305.50, or 0.18% return on the 2016 beginning balance.  At the time of this writing, three have already gone ex-dividend; however, the March call on CMI is in the money, and if that position is called away it will reduce the dividend haul by $97.50.  

The good news on CMI is that if the March contract is called then there will be a gain on the position of $125.00 – that is one of two likely gains this month, and it offsets the lost divided if it is called away on the ex-dividend date.  The other is FB, where the February contract is in the money and the account stands to make a gain of $138.00.  Those two gains combine for an estimated return of $263.00, or 0.16% return on the account’s starting value.

The NUE position has an in the money February contract that I will manage by rolling out and up.  The stock has been out of favor for some time even though it has an S&P 5-star rating and if I let it get called I will take a big loss.  Instead, I’ll continue to hold it and wait until the position is break even or better before letting it go.

All in all, it looks to be a slow month for Rescue My IRA – just waiting for bottoms before the activity level increases again. 

That’s it for the January update.  Until the February post, happy trading!

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