tag:blogger.com,1999:blog-35705922480897666652024-02-18T18:26:46.649-08:00Rescue My IRALike many of my generational colleagues, the baby boomers, I've found that my best intentions about saving for retirement aren't always meeting the mark. In 2011, I took some old 401(k) accounts and combined them into a self-directed IRA with Scottrade, and established a strategy of using covered calls to stabilize and enhance my returns. Rescue My IRA chronicles the progress of my IRA rescue using this approach.Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.comBlogger345125tag:blogger.com,1999:blog-3570592248089766665.post-9565742234721189862018-01-06T06:13:00.002-08:002018-01-06T06:13:41.888-08:00Rescue My IRA: 2017 Annual Recap<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Recently there was a
comment on the blog asking if I was still following the covered call strategy
in Rescue My IRA. Although the quantity
of posts has fallen off, the RMI strategy is still in place – it may be time to
dust off the trading plan, however. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">In any case, it is
time to write up a short summary of how the account's 2017 results. This year was a busy one for me: in May, I
finally opened the brewery I’ve been planning since about 2013. I drew a portion of the investment from this IRA,
against the advice of my accountant and just about everyone else, but those
funds helped us with the launch and that is a passion project that will go for
the next 10 or more years (and just maybe someday will make some money!), so I'm comfortable with the decision.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As in recent years,
this year’s final report on Rescue My IRA results will summarize key highlights
without spending too much time on monthly commentary. So here goes: <o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">BLUF,
or Bottom Line Up Front:</span></i></b></div>
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<ul>
<li><span style="font-family: Arial, Helvetica, sans-serif;">The account opened in
January 2017 with a balance of $183,945.12; after a withdrawal in March
(investment in the brewery), the balance was $143,768.93, and the December 2017
ending balance was $151,486.03.</span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">Using the March value
as the basis of gain/loss calculations, the dollar gain for the year,
calculated on a March to December basis, was $7,717.07, or 5.37%.<span style="color: #333333; font-size: 12pt; text-indent: -0.25in;"> </span></span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">The account
underperformed the benchmarks I use for comparisons - the S&P500 gain was 21.83%. </span></li>
</ul>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Long-term
Performance:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">In dollar terms, the
account’s statement value has increased from $127,606.44 at the start of 2012,
to $151,486.03, a gain of around $24K, which excludes the $45K withdrawal
during 2017. The account has earned a
positive return every year except 2015, as summarized below: </span></div>
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<ul>
<li><span style="font-family: Arial, Helvetica, sans-serif;">2012: 4.11%</span></li>
<li><span style="color: #333333; font-size: 12pt;"><span style="font-family: Arial, Helvetica, sans-serif;">2013: 16.31%</span></span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 12pt;">2014: 8.50%</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 12pt;">2015: 0.00%</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 12pt;">2016: 9.75%</span></li>
<li><span style="color: #333333; font-family: Arial, sans-serif; font-size: 12pt;">2017: 5.37%</span></li>
</ul>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The account's average annual
return for these five years is 7.34% - that’s not bad, but it is short of the
12% goal I’ve set for Rescue My IRA. In
past years I used the calculator at </span><a href="http://www.moneychimp.com/features/market_cagr.htm"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">http://www.moneychimp.com/features/market_cagr.htm</span></a><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> to calculate a comparable return, that
suggests I could have earned 13.75% on average from 2012-2017.<o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Analysis:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As far as explaining
why the Rescue My IRA returns fall short of these benchmarks, there is one essential
reason – my status as a small-time retail investor, which means I pay fairly
high fees on average, and my trades are all manually entered, a process that is
less efficient than computerized trading. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">At the end of 2016, I
was carrying a large amount of cash reserves in the account, more than 40% of
the account value, in anticipation of the impact of the changing US
presidential administration. I held this
large portion of the account balance out of the market through March, when I
made the investment in the brewery. So
there was an impact from the opportunity cost of this decision, reducing the
overall return in the account; since March the cash returns have been
maintained at a 10% average rate. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For now, I continue to
use the strategy of focusing on S&P 500 Index stocks, typically selecting
from shares that are rated 4- or 5-stars on the S&P system, and seeking
companies that pay dividends in the range of from 3% to 5% annually. This approach may limit how many home runs I
get, but it provides monthly cash flow and reduces risk somewhat.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As in past years, I’m satisfied
with the results in this account, and I have a good feeling about what I’m
accomplishing by being in control of the investment choices and approach. That remains one of my primary goals for this
account. <o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Resolutions
for 2018:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">During 2017, I had a
lot going on while we were getting the brewery started, and it still requires
about 20 hours of work a week besides my day job. These demands meant I stopped using cash
secured puts as frequently as I did in 2016, although from time to time I was
able to put together a short-term high % return using that strategy, typically using
either SPY ETF or FB shares. The work
load will continue in 2018, so I expect status quo on this strategy going
forward.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Looking back at last
year’s report, I was bearish and expected a correction to occur, correlated
with the new US administration. That
never occurred, and the market continued rising – because of my cash reserve
strategy I missed out on some of those gains.
It’s my sense that even more than last year we face the prospect of a
market correction, so I am going to begin to take steps to manage that risk by
increasing cash.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Concluding this
section, there was one final idea I closed with last year – while I appreciate
the risk mitigation that portfolio diversity offers, and that is why Rescue My
IRA will usually have between 12 and 16 active positions at any given time, I
could go for a simplified approach that uses S&P 500 ETFs, like SPY, as a
surrogate for the actual shares. I had
set a resolution, not achieved, to begin a transition to this strategy in 2017.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I guess I enjoy
picking shares for the covered call strategy too much to move over to the ETF
approach. I’ve got a great position running
on FB, for example, that has earned more than 30% in 20 months, and I don’t
think that is possible with ETFs. So there
is an implicit entertainment value to Rescue My IRA besides the explicit
returns. <o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">In
conclusion:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I still believe that
the stock market will grow in the long-term, although we face the
increased risk of headwinds in 2018. Compounding
this is the idea that many of the economic policies of the Trump administration
and lackey GOP Congress are designed to benefit the extremely wealthy, not middle class
small-time investors like me. It’s
a year to be carefully wary, to put in place a solid risk management strategy,
and that is my plan for 2018. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I hope my readers – if
there are any left – had a great 2017, and have their plans in place to build
an excellent 2018. Happy trading to all! <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-62576387932287415942017-02-02T04:24:00.001-08:002017-02-02T04:24:43.825-08:00Rescue My IRA: January 2017 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Here we are two weeks into the Trump
administration, and even though we’ve seen a little rally since November, I
believe the market is facing headwinds from two factors. As I’ve continued to
write since last fall, I believe that we’re in for a cyclical consolidation and
possible recession this year, which is why I’ve increased my cash reserves in
Rescue My IRA.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The first factor is the inevitable
return to the mean after the 8-year recovery that followed the Great Recession
of 2007. The second is the impact from
Trump’s plans for the American economy/GDP, based on what we already know: a
reduction in consumption due to increased healthcare costs for the general
public, and limited wages increases; a reduction in the rate of growth of the government contribution to
the economy; and increasing interest rates due to increased federal deficit
spending (that's what happens when expenditures are roughly the same but revenues are reduced due to tax cuts) - the net effect will be to crowd out or defer private sector investment. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The near-term downside of the Rescue My IRA cash
reserve strategy is that there is less money working for me in the market. This month that fact explains why the S&P
500 and SPY benchmarks exceeded the RMI return – 1.79% vs. 0.62%,
respectively. As I wrote last month, for
the early months of 2017, due to the large cash reserve I am holding, I expect
that the account will lag the benchmarks, no matter whether the market is up or
down. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That said, here is the benchmark
data for the account during January: <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 1/31/2017: 185,945.12,
up from the December close of $183,945.32</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 1/31/2017:
$65,605.08, or about 35% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 1/31/2017): AAPL (100 shares), CMCSA (100 shares), CTL (300
shares), DIS (100 shares), FB (100 shares), GE (200 shares), GM (200 shares), IP
(200 shares), KO (200 shares), MAS (300 shares), MDLZ (200 shares), MOS (200
shares), WRK (100 shares), XLV (100 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Cash Secured Put (CSP) positions (as
of 1/31/2017): FB 125 3 Feb 2017</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of Jan): $617.94 (0.34%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of Jan): -$545.65 (-0.30%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $30.00 (0.02%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $102.49
(0.06% absolute return, estimated annualized return 0.67%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2017 year to date
performance as of 1/31/2017: 1.79%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">SPY ETF year to date performance as
of 1/31/2017: 1.79% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 1/31/2017: 0.62%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">
<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">In keeping
with past practice, during 2017, whenever a return percentage is shown in the
monthly forecast, it is calculated using the December 31, 2016 account
valuation. Also, the forecast and actual
returns are always calculated on a “net of commissions and fees” basis, since
these are costs that lower the amounts I receive. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: "Times New Roman";">For February,
</span><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">there are six positions that will go ex-dividend, yielding an
estimated $439.50 in dividends, or about 0.24% of the account’s January 1 value. There are two February in-the-money positions
and the rest are in back months. For
sensitivity analysis, if the two Feb ITM positions, IP and MOS are called away,
the dividend take reduces by $147.50, and the overall yield is reduced to
0.16%. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">At the start of the month, there
were eight positions with expirations in February. Two of those have already been rolled out at
the time of this writing, and I unwound a third position for a loss on February
1. At this time Rescue My IRA has
February in-the-money positions in CMCSA, FB, MDLZ, MOS, and IP, and a February
out-of-the-money position on XLV. The
unwound position was QCOM, which was a loss; at this time the net of stock gains forecast is
-$379.85, or 0.21% of the January 1 value.
<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For now, these estimates add up to a
return of about 0.19%, or 2.22% annualized.
At the end of the month, that is sure to change, because there will be a
decent amount of options activity due to all the position exits. I will keep about 65% of the account value in
stocks – that is a moderate outlook for me, not quite bearish, but certainly
aware of and managing potential risks in the market. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That is the January update. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-37069965309672283852017-01-02T04:59:00.000-08:002017-01-02T07:50:24.274-08:00Rescue My IRA: 2016 Retrospective<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">This year’s final
report on Rescue My IRA results will closely follow the 2015 format – it summarized
the key highlights without spending too much time on the monthly
commentary. So here goes: <o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">BLUF,
or Bottom Line Up Front:</span></i></b></div>
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</div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">From January through
December 2016, Rescue My IRA rose from a balance of $159,592.67 to
$183,945.12. <span style="color: #333333; font-size: 12pt; text-indent: -0.25in;">January was tough, as
that result was down from the December 2015 balance of 167,609.77, which I use
as the basis of year-to-year comparisons. </span></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="color: #333333; font-size: 12pt; text-indent: -0.25in;">The dollar gain for the year, calculated on a December to December
basis, was $16,335.35, or 9.75%. </span><span style="color: #333333; font-size: 12pt; text-indent: -0.25in;">This result is right on
the benchmarks used for the account – the S&P 500 gain was 9.54%, and the
SPY ETF gain was 9.64%. </span></span></li>
</ul>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQEqw_p_VIGVcNN982TqHQbkGAzZa18JJ1cN6vFESZBc2u9498-uvqlUS9aNUB5NCC-x106yD4vDIqAky3-DNuGTZf6CYIsQPk9s_JotZq6OY5VuNawZiyaXGn2RvQ5KbliWP9XGyrSCXs/s1600/RMI+2016.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="379" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQEqw_p_VIGVcNN982TqHQbkGAzZa18JJ1cN6vFESZBc2u9498-uvqlUS9aNUB5NCC-x106yD4vDIqAky3-DNuGTZf6CYIsQPk9s_JotZq6OY5VuNawZiyaXGn2RvQ5KbliWP9XGyrSCXs/s640/RMI+2016.jpg" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
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<b><i><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Long-term
Performance:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">In dollar terms, the
account’s statement value has increased from $127,606.44 at the start of 2012,
to $183,945.12 at the end of 2016, a gain of more than $68K. Besides the S&P 500 and SPY ETF results I
mentioned above, a third benchmark I use is a goal of a 12% annualized return.
Here’s a summary of the results, by year:</span></div>
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</div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">2012: 4.11%</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">2013: 16.31%</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">2014: 8.50%</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">2015: 0.00%</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">2016: 9.75%</span></li>
</ul>
<br />
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12pt;">The average annual
return for these five years is 7.73% - that’s not bad, but it is short of the
12% goal I’ve set for Rescue My IRA – and it basically matches the long-term
average return on the S&P 500. Last
year I found the calculator at </span><a href="http://www.moneychimp.com/features/market_cagr.htm"><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">http://www.moneychimp.com/features/market_cagr.htm</span></a><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12pt;">, which suggests I could have done closer to
16% over this time frame, 2012-2016. </span></div>
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<b><i><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Analysis:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">There are a few
possible reasons that explain why Rescue My IRA falls short of the benchmarks
on annual basis. Most importantly is my
status as a small time retail investor – which means I pay fairly high fees on
average, and my trades are all manually entered, a process that is less
efficient to computerized trading. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;"><br /></span></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Although it didn’t
hurt the results as much in 2016, I have steadily increased the amount of cash
reserves in Rescue My IRA. At year end
the account was nearly 41% in cash, which is a risk management philosophy I
will pursue for the near term, as I expect the market to turn south during
2017. This approach has the potential
for reducing returns during 2017 if I am wrong and the market continues an
upward trajectory. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">I’ve continued using
the strategy of focusing on S&P 500 stocks, and specifically choosing shares
that are rated 4- or 5-stars and paying dividends in the range of from 3% to 5%
annually. This approach may limit how
many home runs I get, but it does reduce my risks as well.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">I’m happy with the
results and I have a good feeling about what I’m accomplishing by being in
control of the investment choices and approach in Rescue My IRA – and that is
one of my primary goals for this account.
<o:p></o:p></span></div>
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<br /></div>
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<b><i><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Resolutions
for 2017:<o:p></o:p></span></i></b></div>
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<br /></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">During 2016, I finally
found a way to put the cash reserves to work by selling cash secured puts on
the SPY ETF. The results were decent and
certainly contributed to matching the market.
For now, however, at least for the first half of 2017, I will not use
this strategy, as I believe we are in for a correction and I would likely get
assigned the puts. I’ll just keep the
money in cash for now – although I may look at some preferred stocks as an
alternative. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">I had thought about retooling
the Rescue My IRA trading plan last year, but never did it. Now that I have some practice with the Cash
Secured Puts approach, it seems like I need to incorporate it in the
write-up. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">One final idea – while
I appreciate the risk mitigation that portfolio diversity offers, and that is
why Rescue My IRA will usually have between 12 and 16 active positions at any
given time, I could go for a simplified approach that uses S&P 500 ETFs,
like SPY, as a surrogate for the actual shares.
I hope be able to spend some time working on a strategy for doing this
during 2017 – we’ll see. <o:p></o:p></span></div>
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<b><i><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">In
conclusion:<o:p></o:p></span></i></b></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">As we look at the
brave new world of 2017, there are things I hope I am wrong about, namely my
concerns about a near-term market downturn or recession; but I also believe in
the long-term growth of the stock market, so that there is the possibility of a
positive year overall. I’m simply going
to put a larger cash reserve in place and wait it out. <o:p></o:p></span></div>
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;"><br /></span></div>
<br />
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<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">I hope my readers had
a great 2016, and are looking forward to an excellent 2017. Happy trading to all! <o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com3tag:blogger.com,1999:blog-3570592248089766665.post-14346047721093943532016-12-31T08:19:00.000-08:002016-12-31T08:48:43.655-08:00Rescue My IRA: December 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Last month during my catch-up post
for October and November, I posted a strategy that I had begun to put in place
for Rescue My IRA as we look forward to what 2017 holds. I’ll start this month with a brief recap of
those ideas, since I’m continuing to execute trades based on those assumptions.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Looking forward to 2017, I believe
that the market faces headwinds from two factors: first, the market has to come to terms with
the American election; and second, we have to remember that we’ve been on an
8-year recovery since the end of the so-called Great Recession of 2007. Even though the market appears to have responded
positively to the election, it seems to me that we are due for a cyclical
consolidation now, and that would have likely happened no matter how the
election turned out. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">My focus for now, until we see how
these variables play out, is to take money off of the table and hold it as cash
reserves. I started in August with about
$34,100 in cash, and as of December 30, I had increased that amount to $72,000 –
about 41% of the account value. I will
continue to work on getting this amount to 50% of the account value while
simultaneously maintaining the other risk management strategy I have, keeping a
portfolio of between 12 and 16 positions in play. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">The near-term downside of this
strategy is that there is less money working for me in the market, so it is
reasonable to expect that monthly results will fall short of the S&P 500
and SPY benchmarks I use to track performance.
That didn’t happen in December, thanks in large part to a tax-free
spin-off from XRX (I counted the new shares as a dividend for tracking
purposes) – and Rescue My IRA ended up slightly ahead of the market. However, in the early months of 2017, I
expect that the account will lag the benchmarks, no matter whether the market
is up or down. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">I’m planning to do a 2016 annual
recap next week, but meanwhile, here is the benchmark data for the account
during December: <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Account Value, 12/30/2016:
$183,945.32, up from the November close of $180,605.81</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Cash Reserve, 12/30/2016:
$72,046.12, or about 41% </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Core Stock Positions (as of 12/30/2016): AAPL (100 shares), ABBV (100 shares), CMCSA
(100 shares), CNDTw (100 shares – this is the tax-free spin-off from XRX), CTL
(300 shares), DIS (100 shares), FB (100 shares), GE (200 shares), GM (200
shares), IP (200 shares), KO (200 shares), MAS (300 shares), MDLZ (200 shares),
MOS (200 shares), XRX (500 shares)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Cash Secured Put (CSP) positions (as
of 12/30/2016): None</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Performance Metrics:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Option Premiums Collected (net,
month of Dec): -$624.02 (-0.37%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Capital Gains Collected (net, month
of Dec): $848.87 (0.51%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Dividends Collected (recognized on
the ex-date): $1,796.25 (1.07%) – includes tax-free spin-off from XRX</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Estimated Interest on Cash Reserve:
$0.62 </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total, Absolute Return: $2,021.72
(1.21 % absolute return, estimated annualized return 14.47%) </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">S&P 500 Index 2016 year to date
performance as of 12/30/2016: 9.54%</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">SPY ETF year to date performance as
of 12/30/2016: 9.64% </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Rescue My IRA year to date
performance as of 12/30/2016: 9.75%</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Next Month To-dos:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">
<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">In keeping
with past practice, during 2017, whenever a percentage is shown in the monthly forecast,
it is calculated using the December 31, 2016 account valuation. Also, the forecast and actual returns are
always calculated on a “net of commissions and fees” basis, since these are
costs that lower the amounts I receive. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">For
January, </span><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">there are two positions that will go
ex-dividend, ABBV and MAS, yielding an estimated $94.00 in dividends. At the time of this writing, ABBV has an
in-the-money January call written against it, so it is probable that the stock
will be called away, reducing the dividend haul to $30.00 from MAS. The expected yield from dividends is either
0.05% or 0.02% for the month – the balance of returns will need to come out of
stock gains or premiums. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">The account’s continuing situation is
that many of the covered call positions in Rescue My IRA are month-to-month
contracts. In January, seven
positions face expiration dates: ABBV,
CMCSA, CTL, FB, GE, IP, and MOS. Only
four are in-the-money as I write this summary, but if all seven are called
away, the account will recognize revenue of $759.02 from stock gains. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">For now, these estimates add up to
about half of my goal for the month, which is a net return of about 1%. Given the cash reserve strategy in place, I
expect some challenges – but I’m up for it, and I’m looking forward to seeing
what the market holds. My outlook is not
quite bearish, but certainly aware of some potential risks in the market, so I
don’t expect much for the first few months of the year. <o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">That is the December update. I’ll post a 2016 wrap up later this week. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-6466199083359594082016-12-04T11:44:00.000-08:002016-12-04T11:44:08.853-08:00Rescue My IRA: November 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Well, somewhere around the middle of
the month, I realized that I hadn’t written my monthly update for October
2016. That’s the first time I’ve missed
the monthly recap in five years on this blog.
The only pitiful excuse I can offer is that I was pretty fascinated by
the last few weeks of the US election – fascinated then, and truly disappointed
now, like millions of others – I don’t see how an embarrassment a day, as we
have experienced over the last month, is going to “make America great again.”<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">America is already great, and I
believe we’ll survive this election, despite the President-elect’s high school
level understanding of the global economy and macro-economics in general. My strategy going forward will simply be to
hunker down in the near-term, and accept what is likely to be a lower than
average return in Rescue My IRA, at least for the first year of the new
administration.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">It’s my sense that two factors will
be setting up some market headwinds as 2016 ends: first, the market has to come
to terms with the American election, and during November we saw that there
appears to have been a relatively positive response. More on my results in Rescue My IRA shortly.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">We also have to consider that we’ve
been on a long-running recovery, essentially throughout the 8-year timeline of
the current administration. There will
be many who disagree with me on this characterization, but those folks will
disagree with me on a whole lot more than that, and so be it. If we simply step back from our disagreements
and consider the probability of an economic slowdown, or even recession, after
nearly eight years of growth, we need to take a sober assessment of the
situation – and my conclusion is that we are due for cyclical consolidation
now, and we would have been, however the election turned out.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So, I’m turning my thoughts to
preparing for that situation by taking money off of the table. During November I started to take money off
of the table and build cash reserves so that I could watch and wait to see what
will happen, and as I write this in early December, I currently have $62,500 in
reserves. To show the growth of cash
reserves, in September, I had $34,100 or so in reserves, representing just
about 17% of the account; that increased to $40,100, or 22.5% in October, and
$53,200, or 30% by November. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">My goal will be to get this amount
to around 50% of the account value and hold it there until I can get a good
sense of how things are going to go. If
the markets are positive during this time, Rescue My IRA will underperform, but
if my hunch is correct, my account value will hold a little more of its value
than the market overall.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That said, here is a summary of result
highlights for October:<o:p></o:p></span></div>
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<br /></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 10/31/2016:
$177,497.69, slightly down from the September close of $178,312.12</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 10/31/2016:
$53,161.61, or about 29.95% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 10/31/2016: 4.0%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">SPY ETF year to date performance as
of 10/31/2016: 5.9% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 10/31/2016: 5.9%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Here is the benchmark data for the
account during November: <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 11/30/2016:
$180,605.81, up from the October close of $177,497.69</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 11/30/2016:
$53,165.61, or about 30% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 11/30/2016): AAPL (100 shares), ABBV (100 shares), DIS (100
shares), FB (100 shares), GE (200 shares), GM (200 shares), IP (200 shares), JNPR
(300 shares), MAS (300 shares), MDLZ (200 shares), MS (200 shares), SPY (100
shares), T (200 shares), TXT (200 shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Cash Secured Put (CSP) positions (as
of 11/30/2016): None</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of Nov): -$533.01 (-0.33%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of Nov): $1,975.69 (1.18%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $179.60 (0.11%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $1,602.38
(0.96 % absolute return, estimated annualized return 11.52%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 11/30/2016: 7.58%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">SPY ETF year to date performance as
of 11/30/2016: 8.10% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 11/30/2016: 7.75%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
During December, there are six positions that will go ex-dividend for the
month, yielding an estimated $377.75 in dividends. If all of these dividends are collected, the
expected yield is 0.23% for the month. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Currently, many of the covered call positions
have evolved into month-to-month situations.
In fact, at the start of December, a total of eight contracts had forecast
expiration dates during the month. At
the time of this writing, the first weekend of the month, five positions are
still in play. Four are in the money,
and one is out of the money, but the forecast gains from these stocks are
$436.78 or 0.26% yield. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">With about half of my monthly goal
of 1.00% return forecast from these activities, covered call premiums will need
to make up the balance. We’ll see how
that turns out in light of my updated cash reserve strategy – it will certainly
be a stretch. The flip side of that
risk, however, is capital preservation…I hope so, at least!<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the November update –
as always, the results are reported net of commissions and fees. I certainly hope that the markets will
perform before than my prognostication. In
any case, until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-16806123133627020292016-10-11T06:39:00.002-07:002016-10-11T06:39:54.805-07:00Thoughts on Cash Secured Puts, Part 2<div class="MsoNormal">
Last week in <a href="http://rescuemyira.blogspot.com/2016/10/thoughts-on-cash-secured-puts-part-1.html" target="_blank">this post</a> I wrote about the strategy of using Cash
Secured Puts (CSPs) in Rescue My IRA to augment the five-year track record I
have in that account with covered calls.
The post referred to the Options Industry Council (OIC) <a href="http://www.optionseducation.org/strategies_advanced_concepts/strategies/cash_secured_put.html" target="_blank">web page</a>,
summarizing the information there into an overview of CSPs:<o:p></o:p></div>
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<i><br /></i></div>
<div class="MsoNormal">
<i>…the risk profile of a CSP trade, while significant (as with
any option strategy), is essentially equal to the risk of a covered call trade. Both trades are focused on the prospect of
owning the underlying security, which has market and equity value, rather than
trading on the value of the financial instrument represented by the
option. </i></div>
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<o:p></o:p></div>
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My plan for this second and final post in this introductory series about
CSPs is to document what I’ve learned about these options so far, since I began
trading them in June 2016. So far, I’ve
sold these options against eight underlying securities: MOS, VLO, CMI, IP, SKX, FLR, TGT, and SPY. For the record, my experience with MOS and
VLO have already resulted in a refinement of the strategy: never sell a CSP on a stock or fund that you
don’t care to own!<o:p></o:p></div>
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<br /></div>
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My approach so far has been slightly contrary to the concept
outlined on the OIC page. Instead of
using the CSP to discount the eventual price of owning shares, I’ve sought to avoid
assignment and to collect premiums for a net gain, essentially trading the CSP
as a security in its own right. This
means combining sell-to-open (STO) and buy-to-close (BTC) trades following the
old stock market maxim of buying low and selling high, except in reverse. <o:p></o:p></div>
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<br /></div>
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Still, I’ve had my VLO and TGT trades result in assignment. These price of these stocks dropped quickly
in the days just before my CSPs expired, leaving my options in-the-money, so
the shares were assigned. Although I was
able to quickly close those positions at a gain, it reminded me that I still
have to do my due diligence research on these trades, and I have since then.<o:p></o:p></div>
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<br /></div>
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For future CSP assignments, my plan is to simply convert the
trade into a covered call situation, writing new options against the same
strike price. In these cases, the CSP
premium can be considered a discount, so being called away at the original
strike will actually result in a stock gain in these trades. The takeaway for me is that this is exactly
what the OIC described.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since August, most of my CSP trades used the exchange traded
fund SPY as the underlying security, and I’ve evolved to using weeklies in the
process. The contracts were never
assigned. Here is the September record
of the SPY trades:<o:p></o:p></div>
<div class="MsoNormal">
</div>
<ul>
<li>Three weekly CSPs at strikes between $212.50 and $216.00</li>
<li>Net option premiums (includes STO/BTC trades and commissions
and fees): $274.00</li>
<li>Absolute return against highest strike price: 1.26%</li>
<li>Annualized return based on 21 days invested: 21.98%</li>
</ul>
<o:p></o:p><br />
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
Thus, at least for the month of September, I was able to
achieve the investment goal that Rescue My IRA uses as a guideline: seek an annualized return of 12%. Some of my colleagues on the Yahoo Just
Covered Calls board write about their goal of 24% annualized. That goal seems feasible to me, although
achieving it probably will require more research and experience than I have so
far.</div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
My way forward is to continue with these trades and build on
my experience of 12 or so trades to date.
I do use the portfolio concept of holding 12 to 16 positions as a way to
mitigate the risk of trades going extremely south, and it’s inevitable that I
will take some hits, but my sense of it is
that by combining the due diligence approach I use with covered calls and
limiting my picks to stocks I wouldn’t mind owning otherwise will make that
risk manageable.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
When I have cash sitting in reserve, that capital's return is negligible. So these CSPs should lead to an improvement in that situation, and improve the annual results for Rescue My IRA in the process.</div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-86952419722598961762016-10-04T04:32:00.000-07:002016-10-04T04:32:14.630-07:00Thoughts on Cash Secured Puts, Part 1<div class="MsoNormal">
After some background reading, and after several years’
worth of posts on the Just Covered Calls Yahoo board, I decided I might try
incorporating Cash Secured Puts (CSPs) to set up trades in my Rescue My IRA
account. I started making CSP trades in
June this year and have written contracts on eight different stocks. In keeping with my goals for the blog, I
thought I might write up a two-parter on what I have learned so far.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Before starting on this topic, I’ll recap the history of
Rescue My IRA, which I started in October 2011 with the goal of generating positive
returns in good and bad markets. The trading
strategy I chose used covered calls in trades that were initiated either as buy-write
transactions or sold against portfolio holdings. My objectives were to generate returns from
three sources: option premiums, stock
gains, and dividends, and to manage capital risk with careful stock selection
and account monitoring.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Except for 2016, which was remarkably precisely a break-even
year, the account has had positive returns every year since its inception in
2011, and a simple average of the annual rate is about 6.50%.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJq_uoJOMFLA36AdVielqklap0lF_42VIi6nwpcM1Sq_jT4_VQ6zzLP-OxPfsaENEHLvGFtpBI6_3XrYsiTE19kSGIq3UsaK194R1SecPEgg6fTEIAUWRB-IW-HvrSk1syRDowHdPMeU4f/s1600/RMI+CSP+Post+1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="310" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJq_uoJOMFLA36AdVielqklap0lF_42VIi6nwpcM1Sq_jT4_VQ6zzLP-OxPfsaENEHLvGFtpBI6_3XrYsiTE19kSGIq3UsaK194R1SecPEgg6fTEIAUWRB-IW-HvrSk1syRDowHdPMeU4f/s400/RMI+CSP+Post+1.jpg" width="400" /></a></div>
<div class="MsoNormal">
<o:p><br /></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At the suggestion of one of the members of the Yahoo board,
I put together a trading plan to guide trading in this account. I seek to have between 12 and 16 positions in
play at any given time, a portfolio approach that means that I am likely to
have some big winners and big losers, but the majority of my trades are likely
to generate average returns. Although
each trade is set up to achieve an annualized return of 12 percent, the
accounts growth reflects only six to seven percent annualized.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As far as stock picking goes, I tried to simplify the rules
into a critical three or four elements:
must be a part of the S&P 500 Index, should be rated 4- or 5-stars
by S&P, should pay a dividend at an annual rate of from three to six
percent, and generally should be a mid-cap or larger. There is a combination of liquidity in these
rules, meaning I don’t get stuck in trades while trying to execute strategic
moves, and the dividend yield rule of thumb combined with the 4-star rating
tends to mean I’m picking stocks with more upside opportunity than downside
risk. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Because I typically have anywhere from 10 to 30 percent of
the account value sitting in cash reserves, and the interest paid on those
balances is negligible, I began looking for a strategy I could incorporate to
generate additional returns. Then I
learned that my fellow investors regard CSPs as substantially the same as
covered calls, and Scottrade began allowing them in IRAs. A severe price reduction in the underlying
security could still create significant risks with any individual holding, but
it seems to me that the liquidity aspect of these trades reduces the overall
risk of any given contract.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Before I get into what I’ve actually learned from CSP
trading already, I thought I would take a minute to cobble together an overview
of CSPs, <a href="http://www.optionseducation.org/strategies_advanced_concepts/strategies/cash_secured_put.html?prt=mx" target="_blank">summarized from the Options Industry Council web page</a>:<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWZ7GiUxS5kHXLndci7Q9w6xb_IEvf69Duj5SjusmQ-kcR2x4cLfw4AvfCsptzp466vDnmhQXpHcugG4m51-AdomNFTD5emBDIfKiOSaRShxzOW-dDllebEqLp7N_Jl0imAupcSYho5WUG/s1600/RMI+CSP+Post+2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWZ7GiUxS5kHXLndci7Q9w6xb_IEvf69Duj5SjusmQ-kcR2x4cLfw4AvfCsptzp466vDnmhQXpHcugG4m51-AdomNFTD5emBDIfKiOSaRShxzOW-dDllebEqLp7N_Jl0imAupcSYho5WUG/s400/RMI+CSP+Post+2.jpg" width="400" /></a></div>
<br />
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
That web site notes that the risk profile of a CSP trade,
while significant (as with any option strategy), is essentially equal to the
risk of a covered call trade. Both
trades are focused on the prospect of owning the underlying security, which has
market and equity value, rather than trading on the value of the financial
instrument represented by the option. <o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-50324872795517781062016-10-01T09:27:00.002-07:002016-10-01T09:29:16.437-07:00Rescue My IRA: September 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Continuing with the recent trend of
starting these monthly Rescue My IRA blog posts with a comparison of some
benchmarks to the performance of my account, the covered call approach is
holding its own for 2016 year-to-date through September 30. The account has achieved 6.39% for the year
so far, while the S&P 500 index is at 6.08%, and the SPY ETF is at 6.10% -
that’s the first time the account has been slightly above the other benchmarks.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEib5cB6ovXmlQpgWIhB6Sz1jVsWzI0nnBEh50_lqJvdjRqEgvgWvCMER5rzg_6spwQ3ELgkyWKodnnkHfqlduS6SzkiUAM0k5WIC-DIHUZCAgUWgoCvfDVQeR0TsQYLfVJPuTKUJ9eEHzBO/s1600/harvest2016-3.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEib5cB6ovXmlQpgWIhB6Sz1jVsWzI0nnBEh50_lqJvdjRqEgvgWvCMER5rzg_6spwQ3ELgkyWKodnnkHfqlduS6SzkiUAM0k5WIC-DIHUZCAgUWgoCvfDVQeR0TsQYLfVJPuTKUJ9eEHzBO/s1600/harvest2016-3.JPG" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Some Cascade hops cones from the 2016 harvest.</td></tr>
</tbody></table>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">On a side note, my home brewing
hobby has now turned into a business.
Last year, I started a farming venture to grow hops, which I used in my
hobby brews but have also sold to a few Virginia breweries. This year I pulled the trigger on starting a Nano
brewery in the Shenandoah Valley with a five-barrel brew house; all of the
financing is in place, the equipment is being fabricated, the mechanical,
electrical, plumbing, and construction contracts are in place, and we have
submitted for licenses – we hope to open in March! <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">I’ve added the second benchmark
here, SPY ETF, at the suggestion of one of my colleagues on the Yahoo Just
Covered Calls board. While the ETF is
one of my frequent covered call trades, and I have often written Cash Secured Puts
(CSPs) against it since early this year, the hypothesis is that it may be a
better benchmark than the S&P 500 tracker, since dividends are
incorporated, and they are a key part of the strategy for Rescue My IRA.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">It was a busy month for the account,
with trading activities balanced between option premiums and stock gains. The highlight was dividends, with eight
positions hitting their ex-dividend dates and yielding almost $560 – that amount
comprises the cash yield on the account.
<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">During the month I unwound two
positions with the goal of settling back into the routine of having from 12 to
16 trades in progress (the month ended with 15 trades in place). The cash balance is averaging about 20 percent,
but I am using that as a way to write CSPs with about 10 percent of the account
value. To date, most of these trades are
on the SPY ETF, as noted above; I think this may be my way forward on <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">To keep moving forward in business
and in life, we have to keep learning.
That’s where I’m coming down on the CSP question – it is adding value to
Rescue My IRA. I’ll put together a blog
post about the approach I’m using later this month.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Here is the benchmark data for the account
during September: <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Account Value, 9/30/2016:
$178,312.12, up from the August close of $177,642.51</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Cash Reserve, 9/30/2016:
$40,066.12, or about 22% </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Core Stock Positions (as of 9/30/2016): AAPL (100 shares), DIS (100 shares), DOW (200
shares), FB (100 shares), GM (200 shares), IP (200 shares), MDLZ (200 shares),
MET (200 shares), NUE (200 shares), PPL (200 shares), QCOM (100 shares), SPY
(100 shares), T (200 shares), TROW (100 shares), XRX (500 shares)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Cash Secured Put (CSP) positions (as
of 9/30/2016): None</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Performance Metrics:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Option Premiums Collected (net,
month of Sep): -$1,306.00 (-0.78%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Capital Gains Collected (net, month
of Sep): $1,286.08 (0.77%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Dividends Collected (recognized on
the ex-date): $556.75 (0.33%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Estimated Interest on Cash Reserve:
$0.24 </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total, Absolute Return: $537.07
(0.32 % absolute return, estimated annualized return 3.85%) </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">S&P 500 Index 2016 year to date
performance as of 9/30/2016: 6.08%</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">SPY ETF year to date performance as
of 9/30/2016: 6.10% </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
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</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Rescue My IRA year to date
performance as of 9/30/2016: 6.39%</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
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<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Next Month To-dos:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><br />
During September, I had to carefully manage six covered call trades that were
expiring during the month. I unwound two
of these, and rolled out several of them, mostly to October, so this month
starts with seven positions forecast to expire.
<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Two positions are long-term under
water: NUE and XRX, so I am looking to
roll them out and up; I’ve picked out some January strikes as my strategic
targets for these. If I am successful
with those two, and the remaining five positions play out, the account will be
most of the way to achieving my goal of 1% cash return during October. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Four of the remaining five positions
are narrowly out of the money, and one is in the money. I can predict a busy month of either rolling
out some of these or setting up new trades if they end up getting called away
at expiration. <o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">After all the dividends in
September, there is only one position with an ex-dividend date in October. The stock is T, and since the November
contract I have on it is out of the money, I am forecasting that Rescue My IRA
will collect that $96.00.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">That’s it for the September update –
as always, the results are reported net of commissions and fees. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-81247477015717844712016-09-03T12:55:00.001-07:002016-09-03T12:55:23.722-07:00Rescue My IRA: August 2016 Covered Call Trading Results <div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As I have been doing this year, I
will start the post with a comparison of Rescue My IRA year-to-date results
with the S&P 500 figure, sourced from the Money Magazine web site. and will continue to do so. As of August 31, the year-to-date performance
of the S&P 500 was 6.34%, and the year-to-date performance of Rescue My IRA
was 5.44%, so we are staying close to the benchmark. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The performance gap closed a bit
this month, possibly for two reasons:
first, I have started using cash secured puts (CSPs) in the portfolio, and
second, I lowered the cash reserve I have been keeping to approximately 10
percent, although at month end I had my BAC shares called away due to an August
31 ex-dividend date so I am sitting at about 17 percent to start the month of
September.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">All in all, there is not much to
report in terms of activity during August, except it was a steady, busy month
of trading. At one point during the
month Rescue My IRA had 17 covered call positions in play and two CSPs – that is
three trades higher than what I might usually have. The goal has been to maintain a portfolio of
between 12 and 16 positions, but I’ll rationalize this exception by saying it
does appear that the trading has set the account up for a good September, which
I will describe after the benchmarks: <o:p></o:p></span></div>
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<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 8/31/2016:
$177,642.51, up from the July close of $176,729.72</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 8/31/2016:
$30,089.51, or about 17% </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 8/31/2016): AAPL (100 shares), CSCO (500 shares), DIS (100
shares), DOW (200 shares), FB (100 shares), GM (200 shares), HST (300 shares), MDLZ
(200 shares), MET (200 shares), NUE (200 shares), OXY (100 shares), PPL (200
shares), SPY (100 shares), TGT (100 shares), TROW (100 shares), XRX (500
shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Cash Secured Put (CSP) positions (as
of 8/31/2016): None</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of Aug): -$1,084.83 (-0.65%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of Aug): $1,786.40 (1.07 %)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $125.00 (0.07%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.24 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $827.61
(0.49% absolute return, estimated annualized return 5.93%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 8/31/2016: 6.34%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 8/31/2016: 5.44%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
As of this writing, there are six covered call contracts expiring in
September: CSCO, DOW, MDLZ, MET, OXY,
and TROW. If all of them are called away
on expiration (they are a mix between the 2 Sep weeklies and the conventional
contracts), the account will net stock gains of $602.11, or 0.36% absolute
return on the account. A number of these
stocks go ex-dividend during September, so the likelihood of assignment and
receiving these gains is high.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">September is always a good month for
dividends, and 10 of the current positions will go ex-dividend this month. If I collect the dividends on all of them – DOW,
GM, HST, MDLZ, NUE, OXY, PPL, SPY, TROW, and XRX – the haul is $692.75, or
0.41% absolute return. However, there is significant overlap with the
expiring contracts this month, and I am forecasting that the total of dividends
will be more like $259.00, due to the likelihood of having many of the stocks
called away.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The lower dividend factor will be
fine with me if the stock gains are achieved – it’s a total of $851.11, or
around 0.51% absolute return. I’ll need
to make up another $850.00 or so to cover my monthly goal of 1.00% absolute
return – but, hey, bring it on!<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s my update for August. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-57397690221221597652016-08-01T02:58:00.001-07:002016-08-01T02:58:19.113-07:00Rescue My IRA: July 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For the last couple of months, I
have begun the monthly update post with a comparison of year-to-date results
from the S&P 500 and Rescue My IRA.
I have been sourcing the S&P 500 figure from the Money Magazine web
site and will continue to do so. For July,
the year-to-date performance of the S&P 500 was 6.34%, and the year-to-date
performance of Rescue My IRA was 5.44%. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I’ve noted before that I expect Rescue
My IRA to earn a little less on an annual basis than the S&P 500 return in
positive years, or lose a little less than the index in negative years. This is the result of my status as a small
time investor, unable to monitor the market on a constant basis (and to act
immediately because my IRA is in a retail account), because I pay fees on each
trade, and because I make mistakes. I
believe my mistakes are typically because I don’t follow the stock selection
criteria I established in my trading plan – I try to have the discipline to
avoid this problem, but I’m not always successful. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Since June, I have been working on
learning how to incorporate cash secured puts (CSPs) in my portfolio, a trading
approach now allowed by Scottrade in IRAs.
A number of colleagues on the Yahoo “Just Covered Calls” board have used
it. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">One of the advantages of CSPs is that
the cash stays in the account unless the stock is put to you by the option
holder. I see some advantages in that it
should be easier to enter and exit positions with the cash balance there –
avoiding larger losses on the stock itself, that the cash will earn (miniscule)
interest during the option’s term, and that as long as the stocks you are
working with otherwise meet your selection criteria, there is the potential of
buying them at a discount to the market price when you first make the trade.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As I wrote last month, for the most
part, I’m using the same criteria for CSPs as I do for covered calls – the
stock should be a component of the S&P 500 index, the stock rated as 4- or
5-stars by S&P, and it should offer a dividend yield ranging between
3-6%. For CSP candidates, I added a
criterion, setting a goal for the stock to be within 25% of its 52-week low to
be considered, suggesting that there is more upside than downside in a given
trade. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">My first two trades were in the
energy sector, where there are many stocks that meet all of these
criteria. It’s a beaten-down sector
though, and I don’t want to end up holding these stocks, so eventually I closed
out the three trades that I had made there with a slight gain overall. Now, one of the CSPs I have now is with CMI,
which has been a favorite of mine for covered calls – I hope to settle in to a
strategy that will find me investing in familiar names like this.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For now, the market has shaken off
Brexit and the other bad news from June, so the account value of Rescue My IRA
stands at an all-time high. I used the
paper gains as an opportunity to do some roll-ups and position maintenance that
was overdue from the long months of sideways trading. That’s why the current results are more or
less breakeven this month, even though the account value is up nearly $6K from
last month.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">
<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s a summary of my July
results. The benchmarks are below, net
of commissions and fees, as usual: <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 7/29/2016:
$176,729.72, up from the June close of $170,976.96, and a new high for the
first time since mid-2015</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 7/29/2016:
$54,071.72, or about 32%, note that this includes reserved balances for CSPs </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 7/29/2016): AAPL (100 shares), ABBV (100 shares), CSCO (500
shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GM (200 shares), HST
(300 shares), NUE (200 shares), PFG (200 shares) SBUX (200 shares), SPY (100
shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Cash Secured Put (CSP) positions (as
of 7/29/2016): CMI 110 Aug 2016, SKX 23
Aug 2016</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of July): -$633.02 (-0.38%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of July): $529.03 (0.32%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $258.00 (0.15%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $155.01
(1.06% absolute return, estimated annualized return 12.72%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 7/29/2016: +6.34%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 7/29/2016: +5.44%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
There are three contracts expiring in August:
ABBV, FB, and PFG, with the potential of netting stock gains of $932.02,
or 0.56% absolute return on the account.
I’ll have gains on ABBV and FB, but since I sold an at-the-money call on
PFG, I will show a $1.00 loss on the stock value for this position, compared to
an overall return netting dividends and option premiums in excess of 5% over
the course of the 100-day holding period.
<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Also, I’m doing the analysis to
determine whether a roll-out and -up of FB would be profitable at this time –
the current option has a $120 strike price and I have no doubt the stock will
go higher. If I can construct a good
trade with a back month horizon (November-December) that allows me to meet or
exceed a 12% annual return, I will probably execute it. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">August will provide a light dividend
haul, which I’m estimating as $125.00, or 0.07% absolute return. Three positions go ex-dividend this
month: AAPL, INTC, and SBUX. All of my contracts are safe from assignment,
so I will most likely collect all dividends.<o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s my July update. August looks steady – I hope so. In any case, until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-58224855809458465172016-07-04T14:19:00.000-07:002016-07-04T14:19:30.161-07:00Rescue My IRA - June 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">A few more posts and it will be a
habit, but the first item of business for the monthly post is to compare the year-to-date
performance of Rescue My IRA (RMI) with the S&P 500, both as of June 30,
2016: RMI 2.01%, S&P500 2.46%. I’ve mentioned before that I expect the
account to earn a little less on an annual basis than the S&P 500 return,
in positive years, but I also expect to lose a little less than the index in
negative years.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Everything was going fine this month
until the Brits had their votes about leaving the European Union. The markets tanked for a few days and then
started a comeback, and that is where the month ended. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">On news like this I have taken to
buying my covered calls back and then re-establishing them a few days later at
the same price; if the expiration is soon, I’ll do a roll-out at the same time. This activity helped with the covered call
premium returns during June, which happened to be the first month in a few
where we showed positive earnings in all three sources of income (covered call
premiums, dividends, and stock gains).<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The breakthrough this month was my
first cash secured put (CSP) trade, since Scottrade has recently changed its
policy and now allows them in IRAs. On
the Yahoo “Just Covered Calls” board, I’ve learned that this kind of trade is
essentially the same as covered calls, with the exception that instead of
holding the stock, you keep cash in the account in case the stock is put to
you. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For now, I’m using the same criteria
for CSPs as I do for covered calls – component of the S&P 500 index, stock rated
as 4- or 5-stars by S&P, and dividend yield ranging between 3-6%. For CSP candidates, I added a criterion, so
the stock needs to be within 25% of its 52-week low to be considered. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For better or worse, I’m doing this
in the energy sector. The first trade,
which I completed during June, was MOS, where I made a profit on a short-term
trade. I followed that up with a trade
on VLO; that one is profitable as well, but the Brexit market impacts had me
worried about assignment – although that didn’t end up happening.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The game plan for CSPs is to sell this
or next month’s put and either have the option expire worthless or to have the
stock sold/put to you at a lower price than it was on the day of your trade. If
the outcome is expiration, the trade is complete, but if you are assigned the
stock purchase you begin selling covered calls until the shares are called
away. I’m going to keep one or two of
these contracts going in the near-term so I can practice the methodology. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s the update for June. July is harvest month for the hop farm, so I
may not be as active a trader this month as I have been. In any case, my benchmark results for June are
below, and they are net of commissions and fees, as usual. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 6/30/2016:
$170,976.96, which is down from the May close of $171,457.29</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 6/30/2016:
$47,048.88, or about 28%, down slightly on the amount and percentage from last
month. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 6/30/2016): AAPL (100 shares), ABBV (100 shares), CSCO (500
shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GM (200 shares), HST
(300 shares), INTC (200 shares), NUE (200 shares), PFG (200 shares) SBUX (200
shares), SPY (100 shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Cash Secured Put positions (as of
6/30/2016): VLO Sep 52.50</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of June): $263.96 (0.16 %)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of June): $991.80 (0.59%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $524.75 (0.31%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $1,780.81
(1.06% absolute return, estimated annualized return 12.72%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 6/30/2016: +2.46%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date performance
as of 6/30/2016: +2.01%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
Because of the Brexit market action, all of my July contracts have been rolled
out, so there are no transactions on the horizon. I’m sure that just like every other month
there will still be a spate of roll-outs, roll-ups, and maybe even an unwind –
so not to worry, Scottrade, you’ll still earn some commissions! <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">After June’s dividend haul, it’s not
likely that July could ever keep up, but there are two positions with ex-dates
this month: ABBV and CSCO. Together they will pay $187.00 or about 0.11%
absolute return – so I’ve got my work cut out for me to make my goal of 1%
return. <o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s my July update. The summer doldrums are upon us and I don’t
expect to see my action in the market during July. But anyway, until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-61025315067899635252016-05-29T18:38:00.002-07:002016-05-29T18:38:44.747-07:00Rescue My IRA: May 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Let’s start the May 2016 post with a
check of our year-to-date results with where the S&P 500 stands – both as
of Friday, May 27: RMI 2.30%, S&P500
2.70%. The hypothesis is that Rescue My
IRA will earn slightly less than the S&P500, given the inefficiencies I
face as a small investor; however, this performance should be offset by a
smaller loss in down times. I’ll
continue to track these performance indicators to test the hypothesis, but also
to benchmark the account’s performance.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I’m posting the May entry a few days
early this week, since I am just getting back from a week of business travel (Phoenix! “Dry Heat!”) and I’m looking forward to a
week of vacation coming up. Squeezing
this write-up in here before what I expect to be a pretty full 4-day week of
work before we head up to Maine.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">For most of 2016 I have run the
account at 15 or 16 positions, but at the close of May there are 14. Cash reserves are slightly up from the April
balance, this component of the account now sits at around 29%, versus 27% at
the end of last month.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The big trade of the month was unwinding
the FB position I had opened last July with a basis of $98.44 per share. The first option I sold on these shares was a
95 Aug 2015, well in the money, but a trade that would earn a good short-term
return despite the loss on the share price.
Eventually I rolled the shares out and up, settling on a final covered
call with the 105 May 2016.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">When I unwound the position in early
May, the share price was over $117, so the net profit on the trade was nearly
$2,000. That’s an absolute return of 20%
on the original investment of $9,844. Since
I do calculate an annualized return for comparison purposes, this one works out
to almost 26% on the holding period of 285 days. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s how you want all the trades
to work out, but of course they don’t! I’ll
take this one, though, and I’ll look forward to making it work this well again
sometime.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">
<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s the update for May. The
benchmark results are below, and they are net of commissions and fees, as
usual. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 5/27/2016:
$171,457.29, which is up from the April close of $169,909.66</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 5/27/2016:
$49,447.29, or about 29.10%; that’s up slightly from last month. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 5/27/2016): AAPL (100 shares), ABBV (100 shares), CSCO (500
shares), DIS (100 shares), DOW (200 shares), GM (200 shares), HST (300 shares),
INTC (200 shares), IP (200 shares), NUE (200 shares), PFG (200 shares) SBUX
(200 shares), SPY (100 shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of May): -$462.03 (-0.28 %)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of May): $1,895.74 (1.13%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $212.00 (0.13%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $1,645.91
(0.98% absolute return, estimated annualized return 11.78%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 5/27/2016: +2.70%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 5/27/2016: +2.30%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />June is always a good month for dividends, and there are seven ex-dividend
dates declared or expected for the month:
DOW, GM, HST, NUE, PFG, SPY and XRX.
Forecast dividends are $524, but the last three positions have
in-the-money covered calls against them, two with June expiries and one with a
July expiration, so the potential is for a reduction in dividends to around
$300. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The stocks – PFG, SPY, and XRX –
have been taking a little bit of a beating during my holding period and I have
rolled them down. There is the potential
of a loss of $1,521 if the shares are called away, so I’ll watch for a chance
to make some corrections. That’s not
quite a 1% loss, but it seems like there will be some opportunities to roll the
shares up without going too far out into the calendar, and that will be my goal
for June, along with finding one more position to invest in, bringing the
working total back up to 15.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s my June update. We’ll be traveling for the first week or so,
so I’ll be away from the blog. Until next
month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-29371975270715873552016-05-01T06:58:00.001-07:002016-05-01T06:58:24.353-07:00Rescue My IRA: April 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">This year is the fifth year of
Rescue My IRA, and as I continue to learn about the covered call strategy and
refine my approach, I’ve added a statistic to the performance metrics I track –
the S&P 500 Index year to date data.
It’s in the monthly “Performance Metrics” section of this write-up, and
I’ll track the portfolio year to date performance there along with it. For the record, the S&P was at +1.05% for
the year on April 29, and the account was at +1.37%. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The account is up for the year, but it
is down slightly on a month to month basis from March. The month ended with a 10-day string of bad
earnings news; earlier in the month the results were showing a month to month
basis gain. But such is life in the
market for the short-term – long-term we’re up, and hopefully that trend will
continue!<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As far as specific activities in the
Rescue My IRA account, at the start of April there were 15 positions and a cash
reserve of 24%. One position (T) was
called away on the ex-dividend date for a small profit, and I unwound a second
(BAC) at the end of the month, also for a profit, so we closed the month with
14 positions and a 27% cash reserve. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I set up the T position in March to
be a short-term trade, lasting only 21 days.
Between covered calls premiums and the small stock gain the trade
yielded 1.17% over those 21 days, which works out to 20.42% on an annualized
basis – I calculate that strictly for comparisons and use it as a tie-breaker
when considering multiple trades.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As far as the BAC trade goes, that
one also was set up to be a short-term position back in February. After one month roll-out and collecting the
dividend, it began a climb. I decided to
unwind it at the end of April, collecting a 7.94% yield over 60 days, for an
annualized gain of 48.30% - that may be the best of the year so far. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">There was another adventure this
month – one of my colleagues on the Yahoo Just Covered Calls board suggested a
pharmaceutical stock, so I set up an ABBV position. His recommended stock offered what appeared
to be a nice opportunity, but since it was not tracked by S&P it didn’t
meet the criteria I use in Rescue My IRA, so I substituted with ABBV (for a sense
of what my criteria allow in this industry, I have rotated between ABBV, MRK,
and PFE during the last five-years). The position plan for this trade (I have it
on the 60 May contract) offers a hat trick, which means it collects covered
call premiums, a dividend, and a stock gain, with an absolute yield of 4.9%
over 39 days, and an annualized yield of 45.81%. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So that’s the news for April. The
benchmark results are below, and they are net of commissions and fees, as
usual. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 4/29/2016:
$169,909.66, which is down from the March close of $170,565.96</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 4/29/2016:
$46,522.58, or about 27.38%; that’s up from last month’s balance of $38,275.96. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 4/29/2016): AAPL (100 shares), ABBV (100 shares), CSCO (500
shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GM (200 shares), HST
(300 shares), INTC (200 shares), IP (200 shares), NUE (200 shares), SBUX (200
shares), SPY (100 shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of April): -$1,473.041 (-0.88%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of April): $1,216.79 (0.73%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $187.00 (0.11%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: -$69.05
(-0.04% absolute return, estimated annualized return -0.49%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">S&P 500 Index 2016 year to date
performance as of 4/29/2016: +1.05%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA year to date
performance as of 4/29/2016: +1.37%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
The dividends forecast for May includes four positions yielding a total of
$212.00: AAPL, INTC, IP, and AP. None of them have May covered calls written
against them, so it is likely that all of these dividends will be collected.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The May covered call contracts are
ABBV, CSCO, and FB. I’ll look at CSCO
for a roll-out and up this month, as the contract price is slightly below the
purchase price, but if that doesn’t work out the net gain on these positions is
$501.02. That increases by $214.99 if I am
successful rolling out the CSCO.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<br />
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">We’ll see how May goes, but that’s
my April update. Until next month, happy
trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com4tag:blogger.com,1999:blog-3570592248089766665.post-59416485252532205642016-04-02T07:42:00.000-07:002016-04-02T07:42:09.039-07:00Rescue My IRA: March 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The S&P 500 index made its way
into positive territory during March, and I see that the year-to-date gain was 1.35%
on March 31. That’s after hitting a low
of -10.27% in February – where will it go next?
Will there be a pause for consolidation before continuing its climb, or
will it head back downward during the balance of the US election year? <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">To be honest, I’m not so
worried. I chose the covered call
strategy used in Rescue my IRA to insulate me somewhat from market volatility,
and so far that has worked: at the end of February the account’s year-to-date
performance was -2.51% versus the index at -5.09%; on March 31 I calculated a
year-to-date return of 1.76% compared to the 1.35% achieved by the broader
market. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I guess I’m emphasizing benchmarks
this year because the account is approaching its fifth year of operation, and I
truly want to understand how the strategy is performing. The mechanics of the methodology are
documented in my trading plan – I focus on S&P 500 stocks that are rated 4-star
or better (although I have sometimes made speculative choices at the 3-star level), I
look for an annual dividend yield of between 3 and 5 percent, I keep between 12
and 15 positions open at any one time, and I vary the amount of cash reserve I
keep at any given time to match my assessment of market conditions. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">As far as specific activities in the
Rescue My IRA account during March, there were 14 positions and a cash reserve of
25% at the start of the month. Two
positions were unwound this month, and I moved the target reserves to 20%,
allowing me to set up 3 new positions for a total of 15 by the end of the
month. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">My strategy of getting the reserves
up to 30 percent until the election is still in place, and I should be able to
have another look at that during April, since there are three in-the-money
contracts coming up (FB, BAC, and T), and one of them has an ex-dividend date
coming up in the first week of the month.
<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Because I unwound CMI and QCOM
during March, taking gains on both trades, my covered call revenue was negative
this month. It was a great month for
dividends, but March, June, September, and December always are; and so it goes. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Here is a summary of benchmark results
for March 2016 –the amounts are net of commissions and fees. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 3/31/2016:
$170,565.96, which is up from the February 2016 close of $169,800.00</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 3/31/2016:
$38,275.96, or about 23.93%; that’s down from last month’s balance of $42,225.96. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 3/31/2016): AAPL (100 shares), BAC (500 shares), CSCO (500
shares), DIS (100 shares), DOW (200 shares), FB (100 shares), GM (200 shares), HST
(300 shares), INTC (200 shares), IP (200 shares), NUE (200 shares), SBUX (200
shares), SPY (100 shares), T (200 shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of March): -$695.01 (-0.41%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of March): $1,352.67 (0.81%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $471.75 (0.28%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Interest on Cash Reserve (estimated): $0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $1,129.61
(0.67% absolute return, estimated annualized return 7.99%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
There are two positions with dividends during April: CSCO and T.
At the time of this writing, T is in the money with an April covered
call, and is likely to be called away early. If both dividends are collected, the account
will receive $222.00, or 0.13 % return on the 2016 beginning balance, but the
amount reduces by $92.00 to $130.00 if T is called away. The dividend on T is offset by a gain of $149.00 if the stock is called. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Three positions have April covered
call contracts that will yield capital gains if the shares are called away: T, discussed above, and BAC and FB. All three are in the money, and combined they
will yield $937.00 if the shares are called – about 0.56% return on the 2016
beginning balance.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Between dividends and capital gains,
the plan accounts for about 0.64% total gain on the 2016 starting balance so
far. Covered calls will need to make up
the remaining 0.36% if I’m going to achieve the 1% goal that I set for Rescue
My IRA – this will have to be made up with roll-outs or with new positions
after expirations this month. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Over all, it was good to see the
account climb above the 2016 start this month, and even better to see it begin
to reach for some of the high points Rescue My IRA achieved in 2015. Is there more ground to gain ahead? It’s an election year, and it’s atypical for
the market to keep climbing in that environment – but we’ll see.<o:p></o:p></span></div>
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<br /></div>
<br />
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the March update. Until the April post, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-41073338808530980232016-03-21T02:51:00.000-07:002016-03-21T02:51:09.300-07:00New Positions: HST and T<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">After
unwinding the CMI and QCOM positions, I quickly rolled most of the proceeds
into two new positions with HST and T.
Both are ex-dividend plays – their ex-dividend date is between when I
set the trades up and the covered call expiration date, with the theory being
that the stocks could be called away early.
<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">In
the case of an early call, it will mean that I lose the dividend, but since I
can get the money working again pretty quickly, the gain from the new position
offsets the lost dividend.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">Here
are the position plans for HST and T, net of commissions and fees. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<b><u><span style="font-family: "arial" , sans-serif;">HST</span></u></b><span style="font-family: "arial" , sans-serif;"><br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: "arial" , sans-serif;">Transactions</span></u><span style="font-family: "arial" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">Bought
300 shares at average share price $16.81 (total $5,044.00)<br />
Sold 3 $17 APR covered calls. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: "arial" , sans-serif;">Net
Profit:</span></u><span style="font-family: "arial" , sans-serif;"><br />
<br />
1) Options Income: = $113.00<br />
2) Dividend Income (ex-date is 3/29): $60.00<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">3)
Capital Appreciation if assigned at $17.00: $38.00</span><span style="font-family: "arial" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;"><br />
<b>Total Net Profit if assigned on the contract expiration date: $211.00</b><br />
Absolute Return on Investment: ($211.00/$5,044.00) = 4.18%<br />
</span><span style="font-family: "arial" , sans-serif;">Annualized Return if Assigned and Dividend Collected (30 days): 4.18%*(365/30)
= 50.90%<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">If called away on the ex-dividend
date, the absolute return drops by $60.00, but it is still 2.99% for a 15-day
holding period.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<b><u><span style="font-family: "arial" , sans-serif;">T</span></u></b><span style="font-family: "arial" , sans-serif;"><br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: "arial" , sans-serif;">Transactions</span></u><span style="font-family: "arial" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">Bought
200 shares at average share price $38.31 (total $7,661.00)<br />
Sold 2 $38.50 APR 8 covered calls. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: "arial" , sans-serif;">Net
Profit:</span></u><span style="font-family: "arial" , sans-serif;"><br />
<br />
1) Options Income: = $69.00<br />
2) Dividend Income (ex-date is April 6): $96.00<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">3)
Capital Appreciation if assigned at $38.50: $21.00</span><span style="font-family: "arial" , sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;"><br />
<b>Total Net Profit if assigned on the contract expiration date: $186.00</b><br />
Absolute Return on Investment: ($186.00/$7,661.00.00) = 2.43%<br />
</span><span style="font-family: "arial" , sans-serif;">Annualized Return if Assigned and Dividend Collected (21 days): 2.43%*(365/21)
= 42.20%<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<br />
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: "arial" , sans-serif;">If called away on the ex-dividend
date, the absolute return drops by $96.00, but it is still 1.17% for the 21-day
holding period</span><span style="font-family: "arial" , sans-serif;">.</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-74959158040864759782016-03-20T12:44:00.001-07:002016-03-20T12:44:13.013-07:00Unwinding CMI and QCOM<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Looks like the last time I put up a
post mid-month was back in October.
There is finally some good news in 2016, though, with the market
officially making up the ground it had lost this year. And for Rescue My IRA, that also means I had
some contracts that were ready to be called away at a profit!<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">But I did not wait until expiration
on these shares (CMI and QCOM) – instead I unwound the trades a few days
early. I reinvested the proceeds into
HST and T last week, and will post about the new positions tomorrow. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">My philosophy regarding unwinding
trades before expiration is somewhat nuanced – if I can accelerate a planned
gain by a week or so, I will, as long as I can immediately find a next position
for those proceeds to go towards. The
opportunity to do this at a minimum cost usually doesn’t happen until the final
week before expiration, and I am typically able to exit with a cost of about
$10 from the net gain. That is worth it
as long as the quick turnaround is executed, creating a trade with a 2% gross
return.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Meanwhile, here is the final
analysis of the CMI and QCOM trades, net of commissions and fees:<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: Arial, sans-serif;">CMI</span></u></b><span style="font-family: Arial, sans-serif;"><br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><u><o:p></o:p></u></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Shares:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Bought 100 shares in November 2015. The total basis was $9,357.00, for an average
share price of $93.57.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">The covered call strike price ranged
from $93.50 to $95.00 during the holding period, but I sold the shares for
$10,244.77, netting $102.48 per share and a total gain of $1,065.77.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Options:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Total options income: -$488.25;
as I mentioned I rolled the strike price up during the course of the holding,
but I traded the premiums for the stock gain when I unwound the position.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Dividend:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Total dividends collected: $97.50.</span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Net Profit:</span></u><span style="font-family: Arial, sans-serif;"><br />
Total Net Profit after Unwinding: $675.02<br />
Absolute Return on Investment: $675.02/$9,357.00) = 7.21%<br />
Annualized Return (105 days): 7.21%*(365/105) = 25.08%</span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: Arial, sans-serif;">QCOM</span></u></b><span style="font-family: Arial, sans-serif;"><br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><u><o:p></o:p></u></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Shares:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Bought 100 shares in December 2015. The total basis was $4,935.99, for an average
share price of $49.36.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">I sold the shares for $5,222.89,
netting $52,23 per share and a total gain of $286.90.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Options:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Total options income: -$20.25;
this was an unusually stable position, so I never rolled out the March contract
after setting it up in December.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Dividend:</span></u><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: Arial, sans-serif;">Total dividends collected: $48.00.</span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<br />
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<u><span style="font-family: Arial, sans-serif;">Net Profit:</span></u><span style="font-family: Arial, sans-serif;"><br />
Total Net Profit after Unwinding: $314.65<br />
Absolute Return on Investment: $314.65/$9,357.00) = 6.37%<br />
Annualized Return (75 days): 6.37%*(365/75) = 31.02%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-56097571427476318962016-03-04T07:16:00.001-08:002016-03-04T10:49:46.560-08:00Rescue My IRA: February 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">So far during 2016, the market is
down, with the S&P 500 index hitting a low of -10.27% on February 11, after
a few days of trading between -8.00 and -10.00% that week. There was also a week in January where the
index hit similar levels. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">On February 29, the index had
improved to 5.09% - that’s when I benchmarked the performance of Rescue My IRA
for the month. The account sat at -2.51%
at that time, so we are still tracking better performance than the overall
market.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">I started with the benchmarks this
month because my colleague Jeff pointed out an error in my last monthly
post. I was writing during the week
where the S&P 500 was hitting those lows, and must have picked up a
year-to-date metric rather than the final January number, which was -4.96% to compare with the Rescue My IRA result of -4.6% for January. That’s
slightly better than the market, but not as good as I wrote the first time! <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">In any case, I appreciated the note
- Jeff runs the “Just Covered Calls” board on Yahoo and I’ve learned a lot
about the covered calls approach I use for Rescue My IRA from him and the other
members there.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">During February, the account
continued along with 14 positions and a cash reserve that sits at around
25%. I might have liked for that to have
been higher heading into this correction, but time ran out, so we’re sitting
tight. As far as strategy goes for the
way forward, I am going to strive to maintain this number of positions, but I
will average the position value down during the year and continue to build my
cash reserves to 30%.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Although trading activities
consisted mainly of rolling out (and in some cases, rolling up!) covered call
contracts, I did make one wash sale trade this month, unwinding my JPM position
and moving the proceeds over to BAC. I
took a net loss of about $230 on the JPM for an absolute return of -3.47%, but
the April contract on BAC should make up for it with an absolute gain of $398
and an absolute return of more than 6%.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Despite the loss on JPM, the account
generated $1,116.17 in cash returns during February, counting dividends,
covered call premiums, and the loss.
This equates to a return for the month of 0.67%, or a calculated
annualized return of 7.99%. It’s below
my goal of 12% annualized, but given market conditions, I can live with it.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Here is a summary of benchmark results
for February 2016 – as always, these amounts are net of commissions and
fees. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Account Value, 2/29/2016:
$163,406.96, which is up from the January 2016 close of $159,952.67</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total Cash Reserve, 2/29/2016:
$42,225.96, or about 26%; that’s up from last month’s balance of $40,750.30. </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Core Stock Positions (as of 2/29/2016): AAPL (100 shares), BAC (500 shares), CMI (100
shares), CSCO (500 shares), DIS (100 shares), DOW (200 shares), FB (100
shares), GM (200 shares), IP (200 shares), NUE (200 shares), QCOM (100 shares),
SBUX (200 shares), SPY (100 shares), XRX (500 shares)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Performance Metrics:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Option Premiums Collected (net,
month of February): $1,748.45 (1.04%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Capital Gains Collected (net, month
of February): -$938.11 (-0.56%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Dividends Collected (recognized on
the ex-date): $305.50 (0.18%)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Interest on Cash Reserve: $0.33 </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Total, Absolute Return: $1,116.17
(0.67% absolute return, estimated annualized return 7.99%) </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Next Month To-dos:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt;"><br />
<br />
There are six positions with dividends during March: BAC, DOW, GM, NUE, SPY, and XRX. If all are collected, the account will
receive $427.75, or 0.26 % return on the 2016 beginning balance. So far this month, BAC is ex-dividend, and
the remaining five are out of the money, so it’s not likely any will be called
away on their ex-dividend dates <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Two positions have March covered
call contracts that will yield capital gains if the shares are called away: CMI and QCOM.
Both are in the money, and combined they will yield $171.01 if the
shares are called – about 0.10% return on the 2016 beginning balance.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">Between dividends and capital gains,
the March plan accounts for about 0.36% total gain on the 2016 starting balance so
far. Covered calls will need to make up
the remaining 0.64% if I’m going to achieve the 1% goal that I set for Rescue
My IRA. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">I think that’s a stretch, but I’m
glad to see the market coming back a little.
As I write this on Friday, March 4, the account’s balance is in striking
distance of its starting point for 2016, so that’s a good thing. <o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt;">That’s it for the February update. Until the March post, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com1tag:blogger.com,1999:blog-3570592248089766665.post-84008612842809033922016-02-15T10:31:00.001-08:002016-02-15T10:31:52.171-08:00Rescue My IRA: 2015 Annual Results<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The Rescue My IRA year-end
post for 2015 is long overdue – here we are in February already! But we have a snow day and I just got my
recordkeeping for January and February caught up, and I’m motivated, so I think
I might go ahead to put together a wrap up post. This is the fourth full year of running the
account using a covered call strategy; this report covers the January through
December 2015.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPIlm3vaQ09w3xZ1i0upiqiMWdIkwNavj2N7G-fAcvNeqa4mrH8ZaySPDqmNZLpll34hXgBEjYgoHfVp4Wv7gnYOwfqcH1U69AkttEurcsFZODlBqEayUpSx2m9dcOxd_gcSx8ZFhH4_aE/s1600/rmi+2015.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPIlm3vaQ09w3xZ1i0upiqiMWdIkwNavj2N7G-fAcvNeqa4mrH8ZaySPDqmNZLpll34hXgBEjYgoHfVp4Wv7gnYOwfqcH1U69AkttEurcsFZODlBqEayUpSx2m9dcOxd_gcSx8ZFhH4_aE/s400/rmi+2015.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Rescue My IRA followed a winding road in 2015, ending the year<br />almost exactly where it started!</td></tr>
</tbody></table>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> </span><b style="line-height: 15.6pt;"><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Bottom
Line Up Front</span></i></b><span style="color: #333333; font-family: Arial, sans-serif; font-size: 12pt; line-height: 15.6pt;"> – or “BLUF,” as we
like to say at my office: Rescue My IRA started the year with a statement
balance of $167,659.68, and ended the year at 167,609.77. While that is technically a loss of -$49.91
on the year, it’s basically breakeven since the percentage is -0.0003%! </span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Meanwhile, my
benchmarks of the DJIA returned -2.20% on the year, and the S&P 500
returned -0.70%, so I suppose that you can say we outperformed them. But you can also say that nobody is happy about
it. <o:p></o:p></span></div>
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<br /></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Long-term
Performance</span></i></b><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> – in dollar terms,
the account’s statement value has increased from $127,606.44 at the start of
2012, to $167,609.77 at the end of 2014, a gain of nearly $41K. Besides the DJIA and S&P 500 results, a third
benchmark I use is a goal of a 12% annualized return. Here’s a summary of the
results, by year:<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">2012: 4.11%<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">2013: 16.31%<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">2014: 8.50%<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">2015: 0.00%<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">The average annual
return for these four years is 7.23% - that’s not bad, but it is short of the
12% goal I’ve set for Rescue My IRA – and it basically matches the long-term
average return on the S&P 500.
Looking at it another way, the calculator at <a href="http://www.moneychimp.com/features/market_cagr.htm">http://www.moneychimp.com/features/market_cagr.htm</a>
suggests I could have done more like 15% or so from 2012-2015. <o:p></o:p></span></div>
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<br /></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Analysis</span></i></b><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> – as we did last year, here’s an assessment
of why Rescue My IRA falls short of the benchmarks on annual basis:<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">First, I am a “small
time, retail investor” – as such, my fees are fairly high, and I don’t spend
all of my time managing the Rescue My IRA account at Scottrade, although I do
find time to check in on it every day. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Second, while I
started the year with the goal of getting most of my cash reserve in the
market, and was able to get down to 5% cash, by mid-year I had reassessed and
set a goal of getting the reserve up to 30% by October – eventually getting to
the 25% level. Hindsight doesn’t lend
itself to determining whether staying fully invested would have improved
performance – or worsened it! <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Finally, I only invest
in S&P 500 stocks as part of my risk management approach, focusing on shares
that are rated 4- or 5-stars, and further limit my selections to dividend
payers in the range of from 2% to 5% annually.
This approach may limit how many home runs I get, but it does reduce my
risks as well.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">All of that said, the
conclusion I’ve come to is that I don’t have anything to complain about with
these results. I have a good feeling
about what I’m accomplishing by being in control of the investment choices and
approach in Rescue My IRA – and that is one of my primary goals for this
account. <o:p></o:p></span></div>
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<br /></div>
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<b><i><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Resolutions
for 2016</span></i></b><span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> – it’s now
traditional to end the annual results post with some resolutions. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">By the way, I did not
accomplish either of my resolutions last year, which were to find alternatives
for putting my cash reserves to work, and to work on revising the Rescue My IRA
trading plan. I suppose I can account
for this by saying I was keeping busy – I taught a graduate level class at
Catholic University in the spring, and I started a farm, called “Hawksbill Hop
Yards,” on the side…but this year will be just as busy, since I’m teaching
again, continue to run the farm, and will open a brewery this fall – so I guess
I won’t hold out much hope for achieving anything I write this time
either! <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I still would like to
find a way to put the cash reserves to work while they are not invested in
stocks. Going forward, I’ll probably settle
on 20% as the target reserve amount, so maybe keeping half of that in CDs or
bonds will work. The remaining half
would be for liquidity purposes.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"> <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Retooling the trading
plan seems like a low hanging fruit goal, so I’ll try and take this on,
especially if I come up with a way to achieve resolution number 1. As I wrote last year, now that I have a few
years of experience with this approach, there are probably some insights I can
apply to improve my results by a few percentage points (but there won’t be
major changes). <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 15.6pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the tardy
2015 wrap-up. It’s onward and upward for
Rescue My IRA, and I will continue to use the covered call approach for 2016. <o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="color: #333333; font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">I hope my readers were
more successful with their accounts in 2015 than I was – and here’s to happy
trading next year! </span><o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-87268989748912934822016-02-13T16:09:00.001-08:002016-02-13T16:09:48.619-08:00Rescue My IRA: January 2016 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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!<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Here is a summary of benchmark results
for December 2015 – as always, these amounts are net of commissions and
fees. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 1/31/2016:
$159,952.67, which is down from the December 31, 2015 close of $167,609.77. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 1/31/2016:
$40,750.30, or about 24%; that’s up from last month’s balance of $40,173.77. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of January): $152.64 (0.09%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of January): $0.00 (0.00%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $149.00 (0.09%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Interest on Cash Reserve: $0.34 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $300.98
(0.18% absolute return, estimated annualized return 2.15%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
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. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">All in all, it looks to be a slow
month for Rescue My IRA – just waiting for bottoms before the activity level
increases again. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the January update. Until the February post, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-56106793093149952002016-01-04T04:32:00.000-08:002016-01-04T04:32:38.176-08:00Rescue My IRA: December 2015 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Rescue My IRA ended the month very
near the starting point for 2015 – so we had a sideways year. The noncommittal year was often a theme of
these monthly posts – I will take some time over the next few days to have a
look back at the year and do an annual summary post. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Between dividends, stock gains/losses,
and covered call premiums, we were able to generate cash returns of more than $1,700,
or 1%, during the month, which was right on the goal. That these returns don’t automatically
translate into the account being more valuable is one of the complexities of
investing that I don’t work too hard to understand – I just take comfort in
knowing that I held my own. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends were key to the December
results – the month started with a forecast of seven positions going ex- during
the month, including GE, which was called away.
The total return from dividends was $450 for the month, or about 0.27%
on the account basis. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Notable options transactions during
the month included unwinding USO for a stock loss of $809, and having my GE and
MSFT positions called away for offsetting gains of $113 and $587 respectively,
providing a net of -$104.<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">With a new year beginning and
election news preparing to dominate mindshare even more than it has in the last
six months, I don’t hold out much hope for a strongly positive market during
2016. I remember the terrible market of
2000 as my point of reference, when Bill Clinton was incumbent and could not be
re-elected – the response anticipating George Bush was horrendous. While the market hasn’t yet thrown in the
towel as it did back then, there are rough roads ahead, enough to lead me to
think we’ll be sideways for a while until it begins to look like there is a
clear front runner between the two sides.
<o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Hopefully that’s when we’ll see a
growth phase return. I’ll continue to
build cash reserves to the 30% level through the election. Meanwhile, here is a summary of benchmark results
for December 2015 – as always, these amounts are net of commissions and
fees. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 12/31/2015
Market Close: $167,609.77, which is down from the November close of $170,104.40;
it’s also down slightly from the account’s 2015 starting point of $167,659.68. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 12/31/2015
Market Close: $40,173.77, or about 24%; that’s up from the November
balance of $33,272.30. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 12/31/2015): 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)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of December): $1,417.22 (0.85%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of December): -$104.120 (-0.06%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $450.00 (0.27%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Interest on Cash Reserve: $0.29 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: $1,763.39
(1.05% absolute return, estimated annualized return 12.62%) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
While December was a great month for dividends, January is relatively
quiet: there are only two positions with
ex-dividends this month. In fact, the
ex-dividend date for the two stocks, CSCO and JPM, is January 4, which are out
of the money at the time of this writing.
It looks like I can count on that $149.00 return in dividends, which
represents about 0.09% on the account’s 2016 beginning value of $167,659.68. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">This month there are five covered
call contracts set to expire. Of the
five – DIS, FB, JPM, NUE, and XRX – only FB is in the money at the strike price
of $100, which will generate a $138.00 stock gain on this position. Both NUE and XRX would show losses at the
current strike, so I will plan to roll them out when I have the opportunity. If the remaining contracts are called away,
the account will generate $307.00 in stock gains, about 0.18% return; it’s more
likely that only FB will be called away for a gain of $138.00, or a 0.08%
return.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That means that I can plan for at
least four roll-outs during the month ahead, with call premiums needing to make
up the difference between my monthly goal of a 1% cash return and the forecast
returns from dividends and stock gains, which ranges from 0.17% to 0.27%. So those transactions will keep the month
interesting. <o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the December
update. I’ll put together a year-end
summary for 2015 in the next week or so.
Otherwise, until the January results post, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com1tag:blogger.com,1999:blog-3570592248089766665.post-26019004373016709532015-12-08T04:16:00.001-08:002015-12-08T04:16:19.397-08:00Rescue My IRA: November 2015 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">During November, Rescue My IRA
experienced a sideways month, even though the account value continued to
recover from this summer’s correction.
The value closed above $170K for the first time since May, when it was
above $174K – that’s great progress, since at one point the statement value was
less than $160K. At this level, the paper
losses have been made up, but I am still working on some pruning in the account
holdings – an activity that I hope will position the account for future growth.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Notable transactions included taking
profits on LXK, which I had set up as a wash sale for a DDD position. The was another corporate “financial
engineering” position to deal with in HPQ – I’m just about convinced that
merger plays should be avoided in this account, since most of my experience as a small time investor has been negative on these activities, and the loss on that position
accounts for the negative capital gains shown in the update below.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Hopefully we’ll see a growth phase
return to the market for a few months here. I’ll
continue to build cash reserves to the 30-40% level through the election, as I
expect instability from that source and from whatever is ahead with the
fed. Meanwhile, here is a summary of benchmark
results for November 2015 – as always, these amounts are net of commissions and
fees. <o:p></o:p></span></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Account Value, 11/30/2015
Market Close: $170,104.40 – continuing to recover from the correction, above
the account’s 2015 starting point of $167,659.68, and October’s close of $168,803.81.</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 11/30/2015
Market Close: $33,272.30 – just less than 20%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Core Stock Positions (as of 11/30/2015): AAPL (100 shares), CSCO (500 shares), DIS (100
shares), DOW (200 shares), FB (100 shares), GE (500 shares), GM (200 shares), JPM
(100 shares), MSFT (200 shares), NUE (200 shares), SPY (100 shares), SBUX (200
shares), XRX (500 shares)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of November): $312.71 (0.19 %)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of November): -$1,975.40 (-1.18 %)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $124.00 (0.07%)</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.20 </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Symbol; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: -$1,538.49
(-0.95% absolute return, annualized return not estimated) </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<br /></div>
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<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
December is a great month for dividends, with $494.00 forecast on six account
holdings. Two of these positions have
December in the money calls written against them, so the dividend haul could be
reduced to $307.00. There will be
offsetting capital gains if they are called away. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">At the beginning of the month, there
were seven covered call contracts set to expire. I have already rolled three of them out,
either as part of a position repair strategy or because the call premium was
below $0.20, but four remain. All are in
the money, and I am forecasting gains totaling $770.23 on these shares. <o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Month to date, Rescue My IRA has
generated $264.23 in covered call premiums, mostly from the roll-outs I
mentioned above. Based on these
estimated returns, the account has already generated most of the 1% monthly
return I seek on cash flow measures. We’ll
see how things go as the month progresses – some year-end adjustments to the
holdings may still make some sense.<o:p></o:p></span></div>
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<br /></div>
<br />
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<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the November
update. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-71395952694660718142015-11-08T09:48:00.000-08:002015-11-08T10:06:30.535-08:00Rescue My IRA: October 2015 Results<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Notable transactions during October
included doing a wash sale (see the post <a href="http://rescuemyira.blogspot.com/2015/10/wash-sale-lxk-for-ddd.html" target="_blank">here</a>) 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.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<b><u>Account Status:</u></b></span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total Cash Reserve, 10/31/2015
Market Close: $40,283.41 – just less than 25%, currently evaluating an
appropriate level given the market recovery. </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Performance Metrics:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Option Premiums Collected (net,
month of October): $621.20 (0.37 %)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Capital Gains Collected (net, month
of October): -$5,141.15 (-3.17 %)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Dividends Collected (recognized on
the ex-date): $105.00 (0.06 %)</span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Estimated Interest on Cash Reserve:
$0.28 </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "symbol"; font-size: 9.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, Absolute Return: -$4,414.67
(-2.63% absolute return, annualized return not estimated) </span><span style="font-family: "arial" , sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Next Month To-dos:</span></u></b><span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";"><br />
<br />
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. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">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.<o:p></o:p></span></div>
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<br /></div>
<br />
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "arial" , sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">That’s it for the October
update. Until next month, happy trading!<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-77575715204407066552015-10-19T04:01:00.000-07:002015-10-19T04:01:00.196-07:00Wash Sale: LXK for DDD<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">They have that saying about trying
to put lipstick on a pig – it really hits home these days, after the market
correction we’ve experienced during August and September. I had resolved that we would stick with the
covered call strategy in Rescue My IRA and manage the holdings with roll-outs,
roll-ups, and roll-downs – with a deliberate effort to not take losses on the
positions until things settled down.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">This approach was in synch with the
overall market. At one point during the
correction more than 20 of the Dow 30 stocks showed a negative return for the
year, which I interpreted to mean that everybody was feeling the pain. That further reassured me that I should hang
tight.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Fast forward a few weeks, and now in
mid-October better than half of the correction has been recovered. The list of Dow 30 stocks down for the year
was back in the low teens, where it was before the correction. I took the recovery as an opportunity to do
some weeding Rescue My IRA, focused on my DDD position, established with a 500
share purchase in July 2015.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">This position tanked, and while I
had managed to offset some of the depreciation with roll-outs and roll-downs
(the initial strikes were at $22 and the final ones were at $17), but the stock
continued to fall to $13, and it didn’t seem to have good prospects to get back
to the strike price over the next 12 months, so I sought out a wash sale
opportunity. I decided to unwind DDD and
move the proceeds into a new LXK position.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Before I mention the results of the
DDD trade, I want to make a note about the portfolio approach I use in Rescue
My IRA. I try to maintain from 12 to 16
holdings in the account, along with a cash reserve that varies in size. This diversification allows for risk
management – I expect a loss or two every year, balanced by 2 or 3 really good
gains, with an overall goal of an average return ranging from 10% to 12% per
year. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">So the DDD position counts as the
big loss of the year – I took a hit of around 30% on the original investment,
net of commissions, fees, and covered call premiums. I immediately rolled those proceeds to LXK,
as I mentioned above, with a position that is summarized below – forcasting a
30-day gain of around 5%, which will begin to earn back the DDD loss.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Here is the position plan for LXK, net
of fees and commissions; this position was established as a wash sale for the
poorly performing DDD contract. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<b><u><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">LXK</span></u></b><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">This is a 200-share position established
in October, with a basis of $6,285.00, or $31.43 per share. The current covered call is $32 Nov 2015; the
position is a wash sale on a DDD trade that went south. </span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total covered call premiums: $240.50</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total dividend payments (no
dividends): $0.00</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total stock gain at $32: $97.00</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, absolute gain on the
position: $337.50</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Total, absolute return percentage ($337.50/$6,285.00):
5.37%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt;">
<br /></div>
<br />
<div class="MsoNormal" style="background: white; line-height: 12.35pt; margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">Annualized total return percentage
(approx 40 days if held to expiration): 49.00%<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-57715230302665943672015-10-18T07:22:00.002-07:002015-10-18T07:22:28.768-07:00New Position: DIS<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10.5pt;">In
July I had begun to consider whether I should up the cash reserves in Rescue My
IRA to around 30% of the account value.
An adjustment of this sort seemed justified since we are in the last
year of the current administration; the market’s track record suggests that if
you’ve had a good run as we have these last few years the seventh or eighth
year of a presidency isn’t going to go as well.
I figured I had until October to act on this decision, but that’s not
how I worked out – at the present I have about 15% in reserves.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10.5pt;">One
reason the strategy wasn’t fully implemented was my decision to add a position
with 100 shares of DIS – which I started in August 2015 with a $110 October covered
call. Since until this year DIS was an
annual dividend paying stock, I have often gone to the stock for an end-of-year
play on a potential dividend run, targeting December contracts. While I started with the October contract I
have now rolled out the position to December.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10.5pt;">Despite
the correction that subsequently happened through August and September, the DIS
position is holding its own. Assuming
the shares are assigned before the ex-dividend date (the stock now pays
dividends twice a year, July 1 and January 1), the absolute yield will be about
5%, which equates to an annualized yield of 15%, based on a four-month holding
period. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10.5pt;">Since
I did not post on the new trade when it was initiated, here is a recap of the
position plan, net of commissions and fees.
My next post will be an example of a trade that did not do as well. <o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<b><u><span style="font-family: Arial, sans-serif; font-size: 10pt;">DIS</span></u></b><span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: Arial, sans-serif; font-size: 10pt;">Transactions</span></u><span style="font-family: Arial, sans-serif; font-size: 9pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Bought
100 shares at average share price $108.72 (total $10,872.00)<br />
Sold 1 $110 Oct 2015 covered call, subsequently rolled out to Dec 2015<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<u><span style="font-family: Arial, sans-serif; font-size: 10pt;">Net
Profit:</span></u><span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
<br />
1) Options Income: = $440.25<br />
2) Dividend Income (Jan ex-dividend is after the contract period): $0.00<br />
3) Capital Appreciation if assigned at $110.00: $110.00</span><span style="font-family: Arial, sans-serif; font-size: 9pt;"><o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="background: white; margin-bottom: 0.0001pt;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
<b>Total Net Profit if assigned on the contract expiration date: $550.25</b><br />
Absolute Return on Investment: ($550.25/$10,872.00) = 5.06%<br />
</span><span style="font-family: "Arial",sans-serif; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Annualized Return if Assigned and Dividend Collected (120
days): 5.06%*(365/120) = 15.39%</span><span style="font-family: "Arial",sans-serif; font-size: 9.0pt; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0tag:blogger.com,1999:blog-3570592248089766665.post-63511173179938262262015-10-10T04:12:00.001-07:002015-10-10T04:12:17.758-07:00The Hiatus and The Correction<div class="MsoNormal">
I’ve been away from the blog since the beginning of August…over
these last two months I’ve been watching the market as carefully as ever, and I
have been working on Rescue My IRA. I
simply haven’t posted due to a couple of distractions, such as the hops harvest
at my farm (link <a href="http://hawksbillcabin.blogspot.com/search/label/Hops%20Harvest%202015" target="_blank">here</a>), and the ribbon cutting on the building we just delivered at my day
job. I’ll try to catch up with a couple
of posts this week and then make a goal of staying up-to-date after that.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The big news in the market, of course, is the correction
that began in August. Although there
have been minor downward swings since I opened this account in 2011, this was
the first to really test the covered call strategy I use here in Rescue My IRA. More volatility is forecast, but now that the
markets have recovered about half of the correction, it’s a good time to assess
the situation.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I read the Washington Post every weekday morning. While their business section isn’t much,
there is a little table of Dow 30 performance.
At the depths of the correction during the last week of September, fully
24 of the 30 stocks showed a negative return from the year – I figured that
meant everyone, even the big guys, were showing losses…all the more reason to
keep the faith. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
My resolution was not to sell my shares at a loss during the
correction. I determined that continuing
to hold the companies I had chosen and staying true with the covered call
strategy was the best path forward. I
bought and resold options throughout this period – “buy low, sell high” – using
roll-downs and roll-outs as the way to keep the account updated.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I had hoped to increase my cash reserves to around 30% by
October, but the correction got in the way.
Instead, cash is around 15% of the account – I’ll continue to work on
getting this number to my 30% benchmark, since a presidential election year can
be highly variable and I think I could use the correction.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Yesterday, when I checked the Dow 30, the number of stocks
showing a negative return had improved to 18 or so, and it is likely that after
the good day Friday, a couple more are back in positive territory. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
That’s the story with Rescue My IRA as well – at the end of
September, we were showing a hit of around 10%.
After the strong week we had, the account is back to its starting value
for 2015 – right at breakeven. Once
again I have covered calls written against every position, and it looks like I
will make my cash flow goals for October.<o:p></o:p></div>
<div class="MsoNormal">
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<br />
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I follow this post with a summary of some of the roll-outs
and roll-downs I executed over the last two months. Let’s get caught up!<o:p></o:p></div>
Anonymoushttp://www.blogger.com/profile/10647514587230225758noreply@blogger.com0