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.
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.
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:
Account Status:
·
Total Account Value, 8/31/2016:
$177,642.51, up from the July close of $176,729.72
·
Total Cash Reserve, 8/31/2016:
$30,089.51, or about 17%
·
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)
·
Cash Secured Put (CSP) positions (as
of 8/31/2016): None
Performance Metrics:
·
Option Premiums Collected (net,
month of Aug): -$1,084.83 (-0.65%)
·
Capital Gains Collected (net, month
of Aug): $1,786.40 (1.07 %)
·
Dividends Collected (recognized on
the ex-date): $125.00 (0.07%)
·
Estimated Interest on Cash Reserve:
$0.24
·
Total, Absolute Return: $827.61
(0.49% absolute return, estimated annualized return 5.93%)
·
S&P 500 Index 2016 year to date
performance as of 8/31/2016: 6.34%
·
Rescue My IRA year to date
performance as of 8/31/2016: 5.44%
Next Month To-dos:
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.
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.
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.
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!
So that’s my update for August. Until next month, happy trading!
