New Position: FB - third time!

(Note:  A bad thing happened.  My laptop died, and I don’t have access to my spreadsheet files and blog post templates. So I’m behind on posts; I owe my February 2014 results, and I’ve continued trading in the meantime. I probably won’t try to catch up, just post new trades as they come – as I rebuild my spreadsheet files.  I’m hoping that the repair is just a replacement battery – if so, I’ll be sure to back up in the future!) 

I continue to keep about a third of my account value in cash.  I need to average down my position values if this is going to keep up; the average is currently around $11,000 and needs to be between $8,000 and $10,000 in order for my portfolio model to work. I’d like to have between 12 and 16 positions going at any one time, but right now I only have nine in play.

Despite that, I took another bite of FB, again establishing a 200 share position.  This will make the third time with this stock…maybe I should just buy it and hold it instead of these entries and exits with the covered calls.  That is something to think about, but today, I’ll just post the position plan for these shares – net of fees and commissions.

FB

Transactions

Bought 200 shares at average share price $70.21 (total $14,041.00)
Sold 2 70 Mar wk 1s, rolled them to monthlies, and then rolled out to 75 May 2014 (See? I’ve been away)

Net Profit:

1) Options Income:  = $914.37
2) Dividend Income: No dividends on FB
3) Capital Appreciation if assigned at $75.00:  $941.00

Total Net Profit if assigned and dividend collected:  $1,855.37
Absolute Return on Investment: ($1,855.37/$14,041.00) = 13.21%
Annualized Return if Assigned (75 days):  13.21%*(365/75) = 64.31%

Called Away on FB

Last month, I adjusted the FB position that I established in December, rolling up to a $60 strike.  The shares have continued to climb since then, reaching nearly $70 last week as February contract expirations approach.  I had a profitable position as it stood with the $60 strikes, and while I looked for opportunities to roll-up and roll-out, I didn’t find anything to pull the trigger on, and finally allowed the shares to be assigned. 

As I wrote in the last post about FB, this is my second go ‘round with the stock.  I made a great return the first time, and as the analysis below shows, I did well with it this second time.  I’m definitely going to watch for an opportunity to get in again, probably on the next dip below $65, if there is one.  If I didn’t do anything but sell a back-month covered call, I could meet my goal of a 12% annualized return with this stock! 

Here’s the analysis of the most recent FB position.

FB

This is a 200 share position established between November and December 2013 with two 100 share purchases.  The per share basis is $54.94, for a total of $10,988.49.  Past trades had rolled the covered call strike price up to $60. 

There’s an earlier post about adding the second lot of 100 shares while rolling up here: 

http://rescuemyira.blogspot.com/2013/12/fb-add-on-and-roll-up.html

Total option premiums:  $274.93

Total dividend payments (no dividends on FB):  $0.00

Total stock gain at $60:  $994.40

Total, absolute gain on the position:  $1,269.33

Total, absolute return percentage ($1,269.33/$10,988.49):  11.55%

Annualized total return percentage (held 120 days):  35.14%

Conventional Account Trades - FB and SO

I have a small conventional trading account at Scottrade – I have been using more or less the same trading philosophy with it as I do in Rescue My IRA, which is why I post about it here sometimes.  My goals with the conventional account are the same as with the IRA: to achieve a 12% annual rate of return, and to compound that return until the funds are needed.

I just added a little bit of cash from my year-end bonus to the account, and since I had 100% of the cash sitting on the sidelines, I decided to pick up two positions – FB and SO – which I am also trading in Rescue My IRA.

Here’s the position plan for both – all values are net of commissions and fee: 

FB

Transactions

Bought 100 shares at average share price $57.01 (total $5,701.00)
Sold 1 FB Jan 2014 $57.50 for a net of $163.74

Net Profit:

1) Options Income:  = $163.74
2) Dividend Income: No dividends on this stock
3) Capital Appreciation if assigned at $57.50:  $31.89

Total Net Profit if Assigned and dividend collected:  $195.63
Absolute Return on Investment: ($195.63/$5,701.00) = 3.43%
Annualized Return if Assigned (25 days):  3.43%*(365/25) = 50.10%

SO

Transactions

Bought 100 shares at average share price $40.82 (total $4,082.00)
Sold 1 SO Feb 2014 $41.00 for a net of $59.74

Net Profit:

1) Options Income:  = $59.74
2) Dividend Income: Ex-date is Feb 1, dividend is $0.5075 ($50.75)
3) Capital Appreciation if assigned at $41.00:  $0.89

Total Net Profit if Assigned and dividend collected:  $111.38
Absolute Return on Investment: ($111.38/$4,082.00) = 2.73%
Annualized Return if Assigned (50 days):  2.73%*(365/50) = 19.92%

Rolling Out CAT and FB

After I post today about two roll-outs – CAT and FB – I’ll be caught up on the month’s trading.  We’re headed into the holiday weekend and I’ll be drafting my monthly results to go up over the weekend.  Of course the trading week will still have some opportunities and I will seek them out, posting if there are any more trades.

In the meantime, here’s the analysis of the CAT and FB positions.

CAT

This is a 100 share position established in August 2012; basis is $8,716.99 or $87.17 per share. This transaction rolled out to a $85.00 Feb 2014 covered call.  I've held the position for more than a year - it's very much a dog of the DOW and just sort of limps along, albeit with an overall positive return on the position.

Total option premiums:  $908.88

Total dividend payments (including dividends through the current contract):  $336.00

Total stock gain at $85.00:  -$234.17

Total, absolute gain on the position:  $1,010.71

Total, absolute return percentage ($1,010.71/$8,716.99):  11.59%

Annualized total return percentage (held approx 540 days):  7.84%

FB

Since I had a good experience with a short-term trade on FB last month, I decided to try again…even though I knew lightning probably wouldn’t strike twice.  This is a 100 share position with a basis of $5,186.99 or $51.87 per share.

Total option premiums:  $213.21

Total dividend payments (no dividend on this stock – a rule breaker!):  $0.00

Total stock gain at $52.50:  $45.90

Total, absolute gain on the position:  $259.11

Total, absolute return percentage ($259.11/$5,186.99):  5.00%

Annualized total return percentage (held 47 days):  38.79%

Another New Position: FB

After setting up the new WFC position, I still had some of the proceeds left from unwinding AFL and PFE earlier this week, and I wanted to put a good amount of it back to work in the market.  I usually do a screen for this purpose, and while I was working through the list, I found myself distracted and did some random quotes on shares as they came to mind.  I thought I might check out FB to see where it was trading at; I’ve been amused by the track of that stock since it was first listed and traded so poorly the first few months.

Since S&P has FB as a 3-star stock right now and it doesn’t pay dividends, this company would not normally make it onto a screen for Rescue My IRA.  However, I found that I could make a decent trade with an in the money weekly and I pulled the trigger.  On an annualized basis, this will probably be my best ever trade…but since I broke some of my selection rules, I have to remember the bon mot and not get too carried away –

“Bulls make money, bears make money, pigs get slaughtered…”

Here’s the analysis of the FB position.

FB

Transactions

Bought 100 shares at average share price $48.97 (total $4,896.99)
Sold 1 FB wk 1 Nov 2013 $48.50 for a net of $288.74

Net Profit:

1) Options Income:  = $288.74
2) Dividend Income: FB does not pay a dividend
3) Capital Appreciation if assigned at $48.50:  -$64.10

Total Net Profit if Assigned and dividend collected:  $224.64
Absolute Return on Investment: ($224.64/$4,896.99) = 4.59%
Annualized Return if Assigned (3 days):  4.56%*(365/3) = 558.12%

You read that right – annualized return would be over 500% if I could duplicate the trade over and over.  LOL – if only!