Monday, December 26, 2011


With 2011 ending with a positive reversal in the markets and the global/domestic economic outlooks - funny how that happens around Xmas!- I want to wish all the readers and DITM supporters a prosperous 2012.
My Holiday Gift is a trade I tried to put on Friday, but the MM (market maker) was OTL (out to lunch); so I shall reput it on Tuesday, as it goes ex-Dividend Wednesday. So it must be done before then:
Buy shares of DOW, a Schwab "B" rated stock, 4* by S&P, 3.67% dividend; sell the June 26 calls at the marks (they didn't want to split the bid-ask for a Theoretical price). Annualized return should be in the mid-teen range, with a safety net of technical support.
I also wanted to mention a couple very helpful links to aid in DITM trading: has more great ideas than you have money!
The other was mentioned in Steve Sears' Striking Price option column in Barron's this weekend, which closely fits with the DITM strategy - he has allowed me to excerpt it for here and the nonprofit SF Option Group site. The site is CBOE's OIC, which should be extremely useful for any type of option activity - heavens know we could use help these days!
Here is the excerpt from Sears:
"By mid-December, most banks, large and small, release New Year investment outlooks. They hold media lunches. They get a lot of press. Never mind that many predictions prove wrong, or that most sell-side strategists are always bullish about something, and most stockbrokers are always optimistic. And let's never discuss the reality that the performance of most investors' portfolios always trails that of the benchmark indexes.

YET, INVESTORS RARELY TIRE of the old-wine-in-new-bottles routine. This isn't because they are stupid. Each year's set of predictions about which sector is poised to advance appeals to them, because most are trapped and need to make money to retire or send their kids to college or pay for other big-ticket items.

Focus on dividends, and yield-enhancing options strategies. Rather than trying to make the next big score, look at stocks that pay healthy dividends. Dividends, after all, account for about 45% of historical equity-investing gains.
At the same time, resolve to master yield-enhancement options strategies. Visit, a Website funded by the options industry. Study the covered-call strategy that studies have shown to outperform buy-and-hold investing. By selling calls against stocks that they own, or are interested in buying, investors can potentially increase their returns.

SOME COVERED-CALL SALES can generate more money than the actual dividends on the underlying stocks. If the stock isn't called away, the money received for selling the call increases your investment returns.

If the stock is called away, sell a put and try to buy back the shares at a lower price. If you can't repurchase the stock, keep selling puts to generate more conditional dividends. Again, the money received from selling these could exceed the stock's dividend yield. If you do buy the stock because it slid below the put's strike price, the premium will have lowered the purchase price and increased the shares' dividend yield.
Such strategies aren't exotic; some critics might even call them stodgy. So be it."

Tuesday, December 20, 2011


Finally, a silver lining. Today's 250+ point rally hopefully marks the beginning of a nice multi-week rise in the markets after recent gloomy news from home and abroad. My oersonal scenario for 2012 (despite the Mayan calendar forecast of Armageddon) is a Bar Bell market with rises in the 1st and last Q, and choppy volatility into the election. This is based on 4-year and decennial cycle norms.
Fully invested now, I plan to lighten up somewhat into the summer, and re-institute after any major downturns - resulting in lower prices, higher dividend %, and larger IVs in the Calls. Only five of my 22 positions are currently under water - stabilizing no more than $4 under the sold Calls- and receiving higher % dividends and milking Call premiums, I hope to resell Calls "above" expiring levels at expiry.
One that got away today is PM, which went ex-D today, being called away.
Factoring in the sold Put in late July (5 months ago), 200 PM was put to me at 70 in Sept. - net of Puts, Calls and 1 dividend, I received $804 (net of all commissions), divided by a cost of $14009 resulted in 5.74%, or an annualized (if done over 12 months) of 13.77%.
Here is a great link for finding DITM stocks:
Happy Holidays to All!

Saturday, December 3, 2011


The article below is the most recent iteration of my talks around the bay area on DITM, which increasingly appears to be the most optimal of strategies in this volatile, yet lateral market - for now and the immediate future.
I have sent it out to various places in hopes of finding a mutually beneficial situation to domicile my managing funds, while allowing experts to handle the regulatory and legal back office part.
I hope you find it interesting- any suggestions would be greatly appreciated.

By Brent L. Leonard, CMT
* Fully invested, in December 2011 my portfolio received 20 dividend payments, or 1 for each trading day of the month!
* When I buy a $50 stock, and "pre-sell" it 5-6 months later with a $6 call (the 45-strike), instead of an 8% dividend, with my cost basis at $45, the dividend rises to 8.8%. The $1 dividend each quarter is deducted from the part of the stock that I already sold; otherwise the stock would be $46 after a year, excluding appreciation.

* With today's Volatility, I get daily peace of mind knowing any stock loss is minimal, with the safety net in place. If it does fall to $45 at the time of option expiry, I can roll the call down and out to the $40-strike with 100% of my known profit. If it happens to fall below $45, I can resell the next $45 call ABOVE the current price, a la normal covered call writing, waiting until it recovers -meanwhile receiving a higher dividend %.

* In just short of the three years I have been extensively testing DITM with almost all my retirement, all summaries show a 10-13% "annualized" return - with slippage ( waiting for settlement or an ex-dividend date, etc., a more realistic return would be 7-10% for the year.

* According to a recent J.P.Morgan 2011 quarterly report, the following shows annualized returns on other asset classes for the past 20 years:
REITs - 10.5%
OIL- 8.0%
S&P 500 - 7.7%
GOLD - 7.2%
BONDS - 6.1%
HOMES - 2.8%
All the above have no hedge or safety net, as DITM has. Only a 20% or more Bear market can severely hurt a quality DITM portfolio - since 1900, no more than 2 Bear markets per decades (no less than 1) have occurred. (S&P, U. of Chicago)

Since 1790 U.S. securities markets have performed in 18-year alternating cycles: looking backward from the sideways cycle we are currently in - 1982-2000 was the Mother of all Bull markets; before that the sideways 1966-82 (actually down, if inflation-adjusted); before that the 1949-1966 postwar Bull market, and before that the Great Depression, etc.
Contrary to Conventional Wisdom, Buy & Hold no longer works in today's casino environment of hedge funds, high frequency traders. Anyone who gets ready to save for retirement after schooling and raising a family is subject to the 18-year cycle they are born into. The stock market is exactly at the same level as it was, not only a year ago, but 10 years ago.

Thursday, December 1, 2011


I just received notice from Schwab that my TLT had been called away 16 days early. Apparently the call - 10 points OTM - did not have enough time premium to prevent it, with ex-dividend due today.
Final tally: annualized return over (less than) 3 month's holding - 6.6%, below my average, but with little risk. What to reinvest in? Probably KMB - Kimberly Clark, ex-d Dec. 7 - a day that will live.....

Wednesday, November 30, 2011


As my poor brother lies in a hospital with a hip replacement I decided to buy him a get-well present:
Shares of CTL, 37+, with a 8% dividend, going ex-d this Friday, the 2nd. Calls sold ranged from the April 35-strike to the 28-, for between a 9.35% and 14.5% "annualized" returns, depending on one's risk/reward predilection. 28 seems pretty safe. This presupposes receiving the March 2 dividend as well, at $.725.
B-rated by Schwab; 3-star by S&P.

Monday, November 28, 2011

Immediate Trades:

Just back from Holiday, in time to do two trades with ex-D tomorrow (Nov.29). Exceptional returns:
Buy SVU and sell the April 6 call
Buy TAL and sell the Apr. 22 1/2 call
Since I have not been able to connect with a "back office" to handle a DITM fund, despite its promise in this defensive environment, I have bought a surrogate - the GDV Gabelli ETF with similar positions (and a 3+ % management fee).
One of my readers has kindly shared a similar strategist, which warms my heart - please see link below:

Monday, November 14, 2011


As shown in the previous posting, thanks to the recent rally after the downdraft, my small IRA (@$50k) is back on trend via the histogram on my October Schwab statement. As I've mentioned before, although I trade DITM covered calls in most other family accounts, the small IRA is the purest record of DITM, as there are no more annual contributions, nor MRDs (minimum required distributions) from this IRA. It is fully invested.
I looked back 11 years and it is just a few dollars shy of an all time high, versus the DJIA still off 15% from the October 2008 top. Although I did take out $23,500 early in the decade, it was before the DITM was begun, in May of 2009.
The statement shows a YTD (year-to-date) reading of a 9.5% increase, thanks to a rally in October that brought back most of the "under water" positions to parity. Dividends are obviously included in the IRA, although potential profits from the "missing" $23,500 are not.
Considering the Safety Net implicit in the DITM, this return with 2 months to go is quite satisfactory - approximating my "annualized" estimates since its start.
For those readers using DITM for at least a part of their portfolios, here are some suitable candidates ex-dividend in November:
UPS,CVX,CNK,MSFT,NEE,SVU,TAL, AND WHR. Be sure to check the dates for yourself.

Wednesday, November 9, 2011


At the risk of sounding more schadenfreude than sympathetic advisory, I thought I should list all the positions in my personal accounts (fully invested), and how they are performing in relation to their "safety nets" provided by selling Deep-In-The-Money covered calls - especially on this dark day with the Down Jones off over 400 points:


BMY .. 31 .. 27.... +4
COP .. 70 .. 62 1/2. +7 1/2
CVX .. 104.. 92 1/2.. +11 1/2
DIA .. 118 .. 120 ... -2
EPD.. 44.. 41 ... +3
ERF .. 28.. 29.... -1
GE PUT. 15.9. 16... 0
INTC .. 24... 22 .. +2
KKR .. 13.. 15.... -2
KMB.. 70 ..70 .... 0
LINE.. 36 .. 37 ... -1
LLY .. 38 ... 35.... +3
LO 107 1/2 100 +7 1/2
MAT.. 28 .. 26 ... +2
NEE PUT. 55 . 55... 0
NOC .. 58.3.. 60 .. -1.7
PM ... 70... 70.... 0
SVU .. 6.9... 9... -2.1
TLT .. 118 ... 106.. +12
TOT.. 50.4 ... 50 .. +.4
WM... 31.. . 36 ..... -5

The two Puts were sold to take on the stocks, which were ex-D farther out in time, earning money while waiting to do the Buy/Write. In the case of puts gone bad, such as WM, it is possible to roll them out in time, earning nice premium until recovering - often this equals or exceeds the DITM dividend/extrinsic amount, but is riskier.

Tuesday, October 25, 2011


More positive data from my DITM Proxy - my small IRA account - as compared to the overall market. Since the Oct.10, 2007 all-time high of 1562, the SPX has dropped 19.7% below; whereas my Ira (using totally DITM since May '09) has fallen only 3.6% from 2007. This along with much less Volatility due to the safety net of selling lower Calls.
Although I have recently been seeking to manage outside (non-family) funds and accounts to employ DITM, it has been put on hold as I seek more info on the new Dodd-Frank regs requiring more oversight (read gov't paperwork) at the state level. Data from last week's post exemplifies the critical need for an antidote to zero rates eroding middle class wealth, after taxes and Inflation (which will rise even more in the future).
Option expiry saw some activity in my DITM accounts, with more to come, as I expect higher prices through year-end, despite Europe's calamity and the Super Committee inactivity:
Sold a Nov. 70 Put to acquire KMB after its weakness Monday. Will write the Call if put to me before Dec.7 ex-dividend date.
Simon Prop. (SPG) was called away, as it had risen too far to roll out again. Return was 10.3% annualized, which was a rare occurrence that the the annualized (12 month) return was almost the same as the actual/realized return of 11 months!
MAT, WM, and SVU Calls were rolled forward, with ex-d dates coming up - SVU and WM are slightly under water, so I am writing the Calls above the current price, a la traditional CCs.
Regarding the TLT Trade of the Year I mentioned awhile back, it is still doing fine, but it dawned on me recently, that (as shown by charts in my book) the TBT is a very tightly correlated (inversely) ETF, that can be used to hedge the TLT, should it start to drop from the current level - $114 where I initiated the trade. Had I bought the TBT (speculative) when the TLT hit $125, more money could have been made. Any profits on the TBT if the TLT drops to 106 will be additional to the maximum received on the Buy/Write (since I'm not losing money on the TLT until 106). Conversely, since the TLT is capped, any upmove would lose money on the TBT, unlocking the 1:1 "freeze". Complicated?
Finally, KKR, which is slightly under water, looks to be heading up again, so I bought some more shares. It goes ex-d in early November at nearly a 6% rate; will sell the safety net call shortly for more premium.
That's all for now - stay tuned !

Tuesday, October 18, 2011


After visiting with my cousin in San Diego, who is a V.P. of Asset Management for JP Morgan, (and an unsuccessful try with Schwab's Laudus Funds), to set up a fund to manage based on DITM, I still haven't come up with anything solid. Based on 2 1/2 years testing, I still feel it is the best strategy for the current and near-future market environment.
My small IRA (which is the purest test tube for DITM) just hit a 3-year high, after all the turmoil in the markets since 2008. Although the S&P 500 has run 30% from when I started the DITM in May '09, my IRA has run 21%; however, based on the safety net provided by the lower call, since the April 2010 high, the SPX has just regained positive territory, up 1.5% for that span as of today, while my IRA is up 12.7% -as I said, to a new high since 2008.
I did pick up the 3rd Quarter report from JP Morgan, a great wrapup of information. For example, retiring Boomers (the largest population group to date)who spent the past 20 years (after raising families, etc.) saving for retirement, received the following annualized returns from 1991:
REITs - 10.5%
S&P500 - 7.7%
Gold - 7.2%
Bonds - 6.1%
Homes - 2.8%
Average Investor - 2.6%
Inflation - 2.4%
Although I've experienced a 10-13% consistent annualized DITM return, a realistic return (dead money, slippage, etc.)would be 6-10%. This is why I want to start a fund - to actually quantify the return.
Since returning I did a Buy/Write on COP, and the TLT -Dec.106 call still looks great.

Monday, September 26, 2011


Excerpts from a great article in this week's Barron's Previews (I've been beating this drum via my book and talks for nearly 3 years):
One of the Fed's mandates is employment, but based on its actions since the global financial crisis, you wouldn't know that.
So say economists from the American Institute for Economic Research in Great Barrington, Mass. Their analysis shows that the central bank's efforts at monetary stimulus through quantitative easing have cost the economy as much as $587 billion of spending and as many as 4.6 million jobs.
"The effect on the depressed income of savers is something nobody talks about," says Polina Vlasenko, who co-wrote the study with Visiting Research Fellow William Ford, a former president of the Atlanta Fed. She says the pair examined the effect of low interest rates on the $10 trillion of assets that U.S. households hold in instruments such as Treasuries, time and savings deposits, certificates of deposit, money-market funds and municipal bonds.
Next they looked at data going back to 1952 on interest rates one year into a recovery, and found that the interest-rate spread was an average of nearly five percentage points higher than in the second quarter of 2010. Based on the interest-rate differential on $10 trillion, and assuming an average tax rate of 25%, they calculated that spending would have been at least $256 billion. They also calculated the losses in consumption and jobs, They found that, for every one percentage point of interest lost, nearly a half-million jobs and $52 billion of consumption went out the window. The higher numbers included rate-sensitive holdings of pension funds and insurers.
"With the additional jobs that might have been created…the unemployment rate could fall to 6.8%," they said.
Although I believe we'll have at least another test of the lows before any serious rally into yearend, so far the DITM has sailed through quite well, although, fearing the worst, especially in energy (oil) and defense (NOC) I did take my fourth loss in 2 1/2 years (first in 1 1/2) with BTE, which is probably now a buying opportunity - Crisis = Opportunity.
Also called away, but looking good now XLU, which is UP 6 1/2% this year. Barron's dividend column mentioned S&P's Stovall picks of: GIS,UGI,CVX - which I rolled the call forward this month)-HRS and TRV. MSFT has also raised its dividend to the 3% area.
Were I not slimming down for a vacation (I wish), I would be entering these.
NOTA BENE: When I return from So.Cal. I am meeting with my Schwab F/A about starting a Fund based on DITM, for people who either cannot have option approval, or just do not want to hassle the activity of doing it oneself. Estimating a high single-digit return with the safety net, it should definitely beat the above short term interest rate over time!

Monday, September 19, 2011


Welcome new readers from the DITM talk I gave this past Saturday at the monthly SFBAOG (San Francisco Bay Area Options Group) held every expiry Saturday of the month (barring conflict, as with Oct.).
This expiration had lots of activity, as I had several options (sold puts and calls) expire, either OTM (out-of-the-money worthless) in which case I just keep the premium; or ITM (in-the-money)where I take on or sell the stock - puts or calls, respectively.
I am now down to 15 stocks in my portfolio (more in the family), with this Bear market only endangering 3 of the positions. With these, I continue to milk the call premium and take the 3% or better dividends (much better than zero CDs, etc.) and hold them, much like a Bond, until they invariably return to the Buy price - sooner or later.
The only stock put to me last week was PM (Morris Int'l) at 70; since the current price is below that strike/buy price, rather than accept less than the full intrinsic amount (top part of ITM stock), I sold calls ABOVE the buy price - the 70s, as it goes ex-D Friday, the 23rd.
Despite the fact that nearly 100% of analysts and strategists are calling for a higher year-end market, it is possible things are "different this time". Fortunately, the DITM plan works best when markets go sideways to down slowly (not crashing). As I said in my talk, if a stock moves down a few points at expiry, one can "step down" to the next strike price, still receiving the whole amount originally expected, receiving an even higher dividend %.
I also write a sentiment blog every Monday based on my CMT topic - links can be found

Thursday, September 15, 2011


1 day before expiry, I rolled out my CHV call to January, from the 90 strike up to 92.50. The stock is currently at 98.85, and I bought it at 101.75 in May ( a $2.90 loss before commissions);then selling the 90 call as a safety net. So far taking in $1437 from the (net of buyback)calls, and $234 from dividends (assuming the Nov. one), net of commissions will be $1671, plus $9241 makes a total credit of $$10,912, less my initial cost of $10,184 ($728), over 8 months is an annualized 10.7%, unless the stock is below $92 1/2 by January 2012. Definitely better than MMFs or CDs!
BTW, had I just bought the stock, sans DITM calls, even with dividends, I would have gained only $56 for the 8 months - or 0.8% annualized.

Monday, September 12, 2011


Less than an hour after I took my 4th loss in 2 1/2 years (first in a year and a half) on BTE, an energy stock, the market turned positive taking BTE with it. 15% loss after monthly dividends and call premiums. A relief. Watch it soar now!!!


As Barron's outlined a couple weeks ago, it appears that Fed Chairman Bernanke is revising his QE III to the policy of the '60s - to sell short term (driving rates up) while buying long term Tsys (driving rates farther down).
I just put on a fairly safe ( in my view) trade to capture @ 9% annualized returns:
Buy the TLT at 114 while selling an ITM covered call of Dec. 106 (safely below). The "extrinsic" call premium - that which is not part of the ETF in-the-money price- is $1.55 and the MONTHLY dividend is about 3.5%, combining to make 2.25% over the three months, or 9% if done 4 times. Beats less than 2% on the 10-year TSY.

Wednesday, September 7, 2011


In life there are Needs (things we have to have to survive) and Wants (things we'd like to have). The same is true in investing. One wants to preserve the majority of one's capital, but can also speculate for higher returns with a varying amount, depending on the environment.
I just did a study on my DITM strategy from its start in early May, 2009 - ironically, just as the Bull market was starting. Since that time the S&P 500 has appreciated (in price) 32.1%, while my continuously improving and fine-tuning DITM is only up 17.2% - with much more safety, and a much better return than CDs, MMFs, and Treasurys.
With all hubris and schadenfreude aside, since the top of April, 2011, things are reversed: My two smaller family IRA accounts (the purest testing of DITM available) are Down 6.7% and 4.3%, respectively, while the SPX is down 13.1%. Ergo, I am able, so far, to nervously but steadily sail through the violent corrections day to day.
While most investors are heading for the doors, DITM is enjoying higher dividend % and lower entering prices on new stock positions, as well as higher volatility in selling both puts and calls. The hybrid nature (bondlike) allows me to focus on the constant payments, not the price.
Still fully invested, September's expiry will be interesting for both sold puts and expiring calls - in or out of the money.

Wednesday, August 24, 2011


As of last Saturday's option expiration much happened in this volatile market - mostly good: Two LO puts that I had sold to take on the stock before ex-D, expired worthless, netting $240 (ex-D next week); MAT was put to me and I sold some nice 26 calls on them. One of my 3 plungers - DIA - was put to me at 122, so I'll wait on a rebound to sell a call, taking in monthly dividends - a positive.
In this 20% decline only 2 of my 22 stocks plunged - NOC and TOT - so I'll just collect the larger % dividends while I wait as with DIA. Remaining stocks are just above or below water.
Fine-tuning: since MAT was put above the current price (as with the DIA) I wrote calls ABOVE, not the usual DITM below. Any stock that plummets much lower than the market, such as my last (and only) stock losses of 1 1/2 years ago - BP and UVV deserves to be sold. Since there have never been more than two Bear markets in a decade since 1900 (or less than one) let us hope this is one and it is mostly over.

Thursday, August 18, 2011

"Are You Ready For Some DEFENSE?"

In lieu of today's 500+ point rout, I wanted to update the DITM portfolio in my account:
Of the 22 current positions, 9 are still above water ! Mostly because the rose a bit under QE II, and should rise again by year end.
8 positions (covered calls and short puts) are within 3-4 points of B/E (break even) where I receive maximum return (DITM is a fixed income strategy on the stock market, not hoped for appreciation, which can be done outside of it, such as GOLD).
That leaves 5 stocks down as much as 10 points, BUT I am receiving a much higher dividend % on them while I await their return, as well as milking some option premium.
As much as I hate to make or receive market projections - give me facts, not opinions- the strong position of the US stock market and its appeal from European and other foreign investors make me anticipate a huge rally down the line. At worst, entering DITM positions at this time, for the strong of heart, makes a great deal of sense.
BTW - I just learned that Trader's Press has expressed an interest in selling my books.

Wednesday, August 10, 2011


For the first time in nearly 30 years of investing (including the 1987 Crash), at no time have I felt the panic or need to bail out of any of my 15 DITM positions. Although at the recent lows of 20%, most stocks were under water, with the Safety Net cutting losses (as well as some timely hedges -puts and Inverse ETFs), my rationale was that as long as I was receiving the dividends and milking Call premium, I would be well ahead when the downdraft was over - which it inevitably is.
The 4 or 5 worst stocks are defense and energy, along with WM.
Here is what I call a hypothetical microcosm of the market decline:
The following theoretical stock trade best illustrates how the DITM defensive strategy works in the typical market cycle:

Stock XYZ trades at $50; in its usual upward path of a normal market, it rises to $60 (stocks normally have a right translation, meaning they rise 50-60% of the time, partially due to Inflation, correct down 10-20% and trades sideways for the balance). XYZ pays a 4% dividend - $.50 a quarter.
The Investor does a Buy/Write on XYZ at $55, selling an ITM (in-the-money) covered call at $50 strike price for $6 , five months into the future ($5 for the top part of the stock to be surrendered later, and $1 option premium).

Upon reaching $60, a Bear Market sets in and it falls 25%, from $60 to $45 ! The Investor's cost basis is only $48, including the immediate and second dividends.
Meanwhile, anyone else who bought XYZ near $60 is at a huge loss - $15- and must consider selling at some point. However, our Investor, being only down $3, will hold on while receiving the dividend and milking call option premium. No panic, no fear!

5 months later, the stock has rallied back to above $50 again - a normal occurrence. As the 50-strike call expires, the Investor "steps down" and sells the $45 call another 5-6 months out (for another $6). Now the stock is paying a higher dividend %, and the Implied Volatility of the call has risen with the fear from the decline, and should they want to buy more, the stock price is now cheaper.
Bottom line: after 1 year, the stock is called away at $45. Profit/loss is as follows-
Cost: $55.
1st call sold: $6
2nd call sold: $6
4 dividends: $2
XYZ sale: $45
TOTAL: $59 - $55: $4 profit, or 7.37%, while the stock has dropped 10-15%!

Although DITM is a defensive strategy, if one considers the other possible stock scenarios, the Investor would have made a similar profit had the stock moved sideways or slightly up. Only a large rise would have profited more, and the Investor has the choice of only investing a portion (CD or money market funds) into DITM, while chasing stocks with options, ETFs, and other stocks.

More information is available Brent has written a print book and now an eBook on the DITM strategy, called Zero (IN) Tolerance.

Friday, July 29, 2011


Since the start of the cyclical Bull Market of March 2009 (and the start of my DITM strategy the following May) there have been 9 corrections of 5% or more - as of today's low. Including the Flash Crash of May 2010, the strategy has sustained only 3 losses, 2 of which regained some ( BP and TLT )- only the UVV trade was a large plunger. This is over 100 round trip trades, and no losses have occurred in more than a year.
Currently of my 22 positions (fully invested) 14 are safely above water - 8 slightly below. Half of the belows are naked puts which:1) take me up to ex-dividend date 2) add to total return and 3)alert me that the date is imminent, whether the put is ITM or OTM. Upcoming very profitable candidates include LO and MAT.
This has been a very interesting summer so far. In hopes of finding a fund that I could subadvise on to get a pure results reading, I attended a very civilized Schwab dinner at the swank Omni hotel, put on by US Global funds; Thursday, the TSAA held a luncheon at Alfred's hosting Matt Hougan from, an ETF analyzer who will also be at the Money Show.
Also this week I was happily informed that my magazine article on DITM came out in - an English version of the German trading and T/A Zine; also the eBook version of Zero(IN)Tolerance purportedly arrived at screens such as Nook, iPads, Sony, etc. - everyone except Kindle, which may happen in December.
BTW, I would appreciated any feedback about accessing the eBook, as I do not have an eReader. Although successful in bringing it up on the iPad and Nook -both were prices, 2010 dates and ISBN# from my Print book.
The Money Show is August 10 through 12, with Tom Hudson and Hilary Kramer from Nightly Business Report; Charles Biderman, Harry Domash of Dividend Detective and the SF Chronicle; also the TSAA and GGU will have a booth there, and a room on Thursday evening.
This debt decline poses a possible great opportunity to initiate some DITM trades, starting with the DIA, which pays monthly.

Monday, July 18, 2011


What a Weekend! Friday (actually Saturday) was option expiry and several of my short "naked" puts expired -none ITM, so I did not have to take on stocks, although I would not have minded. These July puts: SCCO,HCN,INTC,LLY,TAL, not only brought in several hundred $$, but were a reminder that their ex-D dates were approaching, so whatever extra money in accounts will be spent on buy/writes.
EXC - actually Exelon - was a stock I did a B/W on in Aug. 2009, so I thought holding it 2 years was enough, espec. after Japan. As outlined in my talk Saturday morning to the SF Options Group , the "reversed" annualized return (instead of the normal doubling or tripling of partial year %- I cut it in half for 1 year)was 8.12%.
Cost was $4996 (actually less when discounting the call sold); dividends (9) were $477, net calls sold (after buybacks/rollouts)were $1439; stock was called at my last call strike of $39, or $3891 net of commissions. Net return:$811 or 16.2% over 24 months - a record, beating INTC's 17 month hold. Peace of mind (almost like a 2-year CD):PRICELESS
EXC was not a one-off event for having a stock drop several points after the B/W and still making money; another example was NUE, Nucor, which I illustrated in a magazine article for : coming out July 25. Also dropping ten points.
I'm also having my book -Zero (IN) Tolerance -converted to an eBook next week, cutting the price by 1/2.
Next Thursday, the 28th, the TSAA is having a very civilized luncheon at Alfred's with a speaker from ETF Universe, Matt Hougan, who is also at the Money Show in August. See for details of Alfred's. Universe was also mentioned in the Barron's expansive coverage of ETFs this weekend.
I also learned some things at my talk Saturday, including TOS (ThinkorSwim) has a capability to reverse or close out a buy/write which could ameliorate the Bear market danger of DITM with a stop order; otherwise spending a few cents on a OTM put (making a COLLAR)would be safer.
Also, a couple DITM websites were suggested to me: and for put-selling.

Wednesday, July 6, 2011


No surprise - my Verizon stock, which I dearly love, was called away the day before ex-Dividend date (today). Since I mark all my stocks ex-d and pay dates for my recordkeeping, I saw it coming but decided to let it go, as we are coming into the JASON period of the market (June through November)which not only gets a bit hairy, but I go on vacation a lot during Sept./Oct.
Since I am Bullish on year-end (as everyone else is !), I might just sell an Oct. 36 put ( stock at $37.40) to get an annualized 11% on the put and take the stock on at $36 if it falls to that, or below. That would actually be the same return as if I had rolled the Call to Oct. for $.50 extrinsic plus $.5 dividend today.
Return for the past 6 months on VZ was not that exciting, at 7.63% annualized,since it was held to full term. Bought 200 shares at $7523, got $196 in two dividends and $623 from the calls sold in January.
I'll be discussing the first 6 months' results and new tweaks (selling puts, capturing annual dividends versus quarterly) at the SFBAOG meeting on July 16 monthly expiry meeting at Fort Mason.

Friday, July 1, 2011

6 months Wrapup:

The tables below represent actual trades in the DITM portfolios. The top table consists of trades opened in '09 and '10, closed out in 2011 before July 1; the bottom table holds trades opened and closed in 2011 YTD.


10/14/2009 INTC 6291 184 520
INTC 5391 543 6.1%
5/24/2010 NOC 12147 282 1428 10991 1102 13.6%
10/18/2010 HCN 9961 276 400 9991 706 17.01%
10/20/2010 DIA 33429 378 2932 31115 922 8.27%
10/22/2010 ETN 8774 58 1109 7991 384 13.1%
11/4/2010 CVX 8478 72 646 7991 231 8.17%
11/5/2010 LLY 7135 98 598 6591 152 8.52%
11/18/2010 PEP 6484 96 555 5991 158 5.85%
11/18/2010 JNJ 6389 108 (2)689 5741 450 14.09%
12/1/2010 RYN 5024 54 612 4491 133 10.6%
12/1/2010 MRK 3489 76 345 3191 167 9.57%
11/30/2010 TLT 9924 245 600 9413 223 4.5%


1/11/2011 SI 11881 270* 1035 12479 193 19.5%
1/13/2011 TLT 18423 124 1502 16991 194 4.21%
11/30/2010 TLT 9924 245 600 9413 223 4.5%
1/21/2011 NI 5607 69 469 5241 172 12.27%
1/21/2011 RY 10857 101 1038 9991 273 10.1%
1/27/2011 KMP 7229 0 505 6732 8 1%
2/16/2011 NVS 11309 0 350 10991 32 3.4%
2/17/2011 MCD 7614 61 509 7241 197 10.35%
2/23/2011 LO 15951 260 1686 17321 614 46.19%
3/3/2011 BTI 8069 266 214 8336 217 32.3%
3/23/2011 T 5629 0 338 5391 100 21.32%
3/23/2011 EIX 7300 64 440 6991 195 10.68%
4/1/2011 GRMN 6751 0 576 6809 57 1.01%
12/1/2010 MRK 3489 76 389(2) 3191 167 9.6%
AVERAGE: 13.32%

Monday, June 27, 2011

6 months Wrapup:

Here is a complex math breakdown of 2 sets of trading results in my own Schwab accounts using DITM - no losses, although a couple bad miscues on my part in 2011:
Buy/writes opened in 2010, closed in 2011 YTD:
Total invested $98,827 Return -$4,948 total months -65, divided by number of stocks 11. Unit is 5.9 months. $4948 divided by $98827 = .05%; finally, divide .05 by 5.9 months and annualize ( times 12) = 10.18% ROI
Trades opened in 2011 and closed YTD:
$122,733; Return $2,447 -total 32 months with 13 trades = 2.5 months/trade.
Despite 2 miscues - impulsively bought a stock on ex-D instead of a day or 2 before; sold a put that expired ON ex-D, not before; annualized ROI 9.6%
Not bad for a defensive strategy.


It seems everyone wants to get into the act - Barron's had stories from Steve Sears, the option guy, and even Randall Forsyth about buying dividend stocks and selling defensive calls on them (though not ITM). S Lazo notes since 1930 dividends have supplied 51.5% of stock returns - 100% in the 1930s and 2000s.
Meanwhile, I have been asked to write an article about DITM for this German zine: nice company of authors!
Also, I am preparing my Zero book for eBooks, probably through Smashwords Publishers - price will drop down by 1/3.
I hope to have a meetup with Schwab's proprietary ETF and fund group - Laudus - about possibly helping manage or consult on a fund to purely test the theory, sans GNMAs, bonds, etc. now in my family accounts.
I just put on 2 other trades today: BMY, selling the Dec. 27 calls; and PWE, which is suffering from wildfires in Canada - selling only the July 22 call (scalping for a month, a la Randy Frederick's column in Schwab's Option Letter.
I remain fully invested, unscathed by the recent 7 week downturn -only 2-3 positions slightly under water.

Monday, June 20, 2011


As of last week's option "exasperation", having sensed at least a temporary shelf in the market using sentiment indicators (but still employing a safety net), several puts were sold with the intent to take on desirable DITM stocks shortly after the puts either expire worthless (giving me 100% ROI, 10% ROA), or having the stock put to me at a lower price. For example, if I like a stock that goes ex-Dividend in 2 or 3 months, I sell a lower put to expire just before that date and add it to profits.

So far my DITM portfolio has not had a losing trade in over a year -since BP, and TLT declines. However, 2 or 3 of my 18 are slightly under water, collecting option premium and >3% dividends.

June Puts include: ERF put to me at 31, sold the 29
XLU major screwup - put to me Friday, expiry -the same day as ex (as without) div'd. I hope to trade out of it.
KKR Call expired at zero - will take dividends until it rises again, selling a Call.

July Puts include:

August puts include DIA, so far. Other candidates, if I get some more money to invest: DEO,BMY. Caveat Emptor!

Monday, June 13, 2011


It took 5 weeks of down market action to happen, but in the same week, two of the more conservative institutions - Schwab and Nuveen - each came out with reference to the in-the-money (DITM) strategy I have been successfully testing for over two years. Schwab's top option guru, Randy Frederick, advised in an investment letter, to use almost exactly the plan I have been using, although he scalps with a 1-month call, rather than 5-6 months to get 2 dividends.

Nuveen has 3 CEFs (closed-end funds), using Index options and having to rely on premium/discounts, have underperformed the ETF plan. My main source of reference - Seeking Alpha, describes them.

Over the weekend my Merck (MRK) got called away after 6 months. The numbers are:

Bought Dec. at $3490, received 2 dividends at $76 (after rolling out calls to July) and a total return of $167. Dividing $167 by initial $3490 and doubled for 12 months, gets one to 9.57% annualized - sort of like buying two 6-month CDs with the same money.

Since this downturn is the perfect environment for DITM (cheaper stock prices, higher dividend %, more option volatility), I have been selling puts on stocks that are not quite to ex-dividend dates, with the hope of having them put to me.

A good example is McDonald's (MCD) which was exercised in May for my Sept. call - so I sold a put for the next cycle.

Friday, June 3, 2011


With the market down 5% in the current correction, 16 of the 18 positions in my accounts are still above water - thanks to the previous bull market. Since DITM is a defensive, fixed income-type strategy, it is getting maximum return at these levels. With even the best fundamental analysts predicting higher levels by yearend, a huge Bear market is not expected - no matter how bad the US and global economies are.
Since this is an optimal time to enter DITM - lower stock prices, higher dividend %, higher option volatility (prices) - I have entered the following positions as mentioned in the last post:
5/31/2011 DIA put 1 Aug.122 250
DIA capture best months: Aug., Nov.,Dec.(spec.)& Jan., May,
6/1/2011 INTC 3 Jul .21 $64
6/1/2011 LLY 2 Jul.37 66
6/1/2011 XLU 2 Jun.33 36
6/1/2011 HCN 1 Jul.50 30
6/3/2011 TAL 2 Jul.30 150
These are good DITM candidates which are not going ex-Dividend for awhile, so I hope to collect put premium (right hand column), but more importantly do the buy/write with a lower stock price, by having the put expire just before the next ex-D date (or just keep the money if still out-of-the-money)-then do the buy/write.

Tuesday, May 31, 2011


One of the complaints of DITM is that it works less well in upwardly moving stocks - au contraire!
I bot MCD in Feb. for $62 and sold the Sept.72 1/2 call. After getting 1 dividend, since it had risen to 81, it was called away in May (3 months later). Annualized profit: 10.35%.
Since I am constantly tweaking DITM ( it's now on a 12% course for 2011), I was reading Steven Sears option column in Barron's this weekend about naked puts on stocks you wish to own. I got to thinking -what if you find a stock you like but the ex-D date is 2-3 months away? Why not sell a put past the ex-D date? If it is put to you, fine - you own the stock and get the dividend; if called away, it is done in a compressed timeframe embellishing your premium.
I'm considering the DIA for Aug. ; since the dividend varies due to 30 components, some months are better than other - Aug., Nov., Jan., May -so why not capture them? Also , it pays a special yearend dividend in Dec. (At least it has done so recently).

Thursday, May 26, 2011

JNJ position

Just got word from my broker that my JNJ position was called away early (I had rolled out the initial call to July, but it was deep-itm (10 points) with ex-d today. Here is the math:
Bot 100 JNJ Dec. 17, 2010 for $6389 (incl. commission); sold April call for 455; bot back and resold 57 1/2 call for net 234 (264 less 30 buyback); got 2 div. for $108 - stock called away at $5741. Net profit was $450, or 7+%; annualized was double that. 14.09%
Not bad for almost the same safety as a CD.

Friday, May 6, 2011


While on Easter vacation I had NI (Nisource) called away before ex-Dividend after 3 months holding. Results were $172 net of commissions on 300 shares at $5600 cost, or 12.27% annualized.
After returning, I decided to keep my 200 COP (Conoco), rolling out May calls before the May 17 next ex-D date (there's a trade here!!), to Aug., netting me another $322, or 8.7%. With the 67 1/2 call well below the current $73 stock price, there is a nice "safety net" for 3 months.
These are my basic DITM trades, while still playing other trades (gold, silver, etc.) with other money.

Thursday, April 21, 2011


Dividend-capturers saw fit to exercise my July ITM calls for today's dividend on RY- Royal Bank of Canada. Hence my first dividend in January of $101, plus extrinsic call price and ROP (return of principal) gained an annualized 10.1%.
I shall be on vacation until May Day, watching the market from my Droid.
Full disclosure: a couple of miscues to report - I hastily did a Buy/Write on KMP on ex-dividend date !, not before, so traded out of it for a minor profit; also Garmin which was an experiment in capturing annual dividends, moved their ex-d from anticipated April to whenever (November?), so I closed that out with a 1% gain - still no losses in DITM since the BP disaster a year ago.

Monday, April 18, 2011

These are the days, my friends -

That it pays to be in DITM. Casually glancing over my fully-invested portfolio of 15 stocks, only 1 - the troublesome TLT (which I hedge with the TBT) - is "under water" with the Down Jones off 250 points. Then the TLT does an about face of nearly 2% upwards.

Options Exaspiration only took one position away -gladly- my PEP, having rolled out a few others earlier in the month. Pepsi was put on in November, so after 5 months i only received just under 6% annualized, only about 1/2 of my current running average.

As I am going on vacation next week, I shall wait until my return to reposition, at which time there are some semi-annual and annual trades to capture.

I've been applying for an author position at SeekingAlpha, which may interfere with my blogging - as they want proprietary claim. It is a great site to retrieve good candidates for DITM, or anything else.

Happy Easter!

Wednesday, April 6, 2011


BTI - British Tobacco, was just closed out after another experiment in semi- and annual dividends.
Bought on March 3 for $8069 (including commission), it was closed out after receiving the $261 dividend - to be paid in May - and $214 for the call. Thanks to a nice rise in the stock (which rose faster than the $530 call buyback price)I was able to close it out before the June expiry, at $8336.
Total return for a month was $212, or 31.5% annualized. After T+3 settlement, the funds will be deployed elsewhere.

If you have any comments or questions on any trade, or do not wish to receive further e-mail updates, please e-mail


Never a dull moment in the DITM world. With the Ex-D date looming for AT&T and Verizon at April 6, I did a buy/write on March 23 using the October call for T and the July for VZ.
Overnite I was assigned on the T calls before my first dividend (of a possible 3) - net of commission I earned $100 for 2 weeks, for a 21.3% annualized return. VZ remains in the account.
Nice Telephone "CALL".

Friday, April 1, 2011

1st Quarter DITM results:

Annualized DITM trades for the 1st quarter of 2011 ( closed out before April 1) resulted in an average of 12.28%. Most of these have been itemized over the past few posts, including my misfire on KMP (buying it on ex-D date instead of before), and a couple stocks which pay annual dividends.
Due to technological difficulties, you can email me at for the complete matrix, if desired.

Monday, March 21, 2011


The latest trade was a close-out on HCN, a Healthcare REIT which I had done previously. This time, however, I struggled with the fact that because of option difficulty, I had to do an ATM (at-the-money) Call, so had to delete it from my track record portfolio (but I'm keeping the money!).
Bot 200 HCN on Oct. 18, 2010 at $49.76 (average price); sold two March 50 Calls (sic) for $400; stock called away on Friday's expiry $9991 (net of commission): return $706 over 5 months = 17% annualized (divided % by 5, multiply by 12).

Friday, March 18, 2011


Here's an interesting DITM trade. A month ago, on Feb.23, I bot 200 LO at $79.71 (as I recounted awhile back) for $15951, sold the June 75 calls for $1686, got the $260 div'd. Would you hold onto the trade, hoping for the May div'd, or exit the position for a $620 profit ? That's 46.6% ITB (in the bank) after 1 month. There is still some extrinsic (OTM) value in the option since the IV ran to 47 on the 7 point runup today. Remember, ATM calls usually only move up 50% (Delta) to the stocks 100%; but the higher it goes DITM, the closer it moves with the stock.
Your call.
It is, after all, a tobacco stock - legislation is pending on menthol now. My BTI dropped 7 points from where I bought it, but due to the Call, div'd, I do not have a loss in it!

Wednesday, March 16, 2011


As Ronnie Reagan used to say - There you go again. Just as I bought BTI, Brit.Amer Tobacco, a few days later it started tanking - from 82 to74 (9.8%) as the SPX dropped 6% so far. I should have known, having had this happen a year ago with UVV -Univ.Leaf, another tobacco company (can be hazardous to your fiscal health).
I sold way less than my 10% lower Call, the 80-strike, because it was a test of the semi-annual dividend strategy (my bad, not DITM's).
Still, I hang on to it - down 6 points, I locked in 2.6 pts. dividend and 2.2 pts Call, so I'm basically only down 1+ pts., which I'll try to ride out, hoping it'll improve.
So far, of my 17 DITM positions, only 5 now are barely under water, needing no action yet.

Tuesday, March 15, 2011


As the NCAA basketball March Madness begins, DITM focuses on the defensive part of the strategy. So far the S&P 500 (SPX) is down 6% from its Feb. 18 closing high. As of today, only 4 of my 17 positions are even under water, let alone in a losing - net of call premium and dividends - position. They are barely below the pre-selling price, so far in no danger of being stopped out.

In a couple weeks I shall update 2011's first Quarter results - should be pretty good.

A couple of Behavioral Finance thoughts: although the market has doubled from its March 2009 low, how many folks got in at the very bottom and sold at the very top?

Also, when I say that DITM protects all but BEAR markets (20% or more), due to the Calls safety net and income, how many got in at the very top and got stopped out at the very bottom, without waiting out the Call premium decay and future dividends? That is the benefit of monthly "laddering", safety as well as steady, monthly income from dividends.

Tuesday, March 8, 2011

And the Beat goes on!

My Rayonier (RYN) got called away after 1 dividend and 3 months (before the 2nd D); right on schedule:
Cost $5024, Div'd 54, Call 612, stock sold 4991= $133 profit, or 10.6% annualized (done 4 X).
DITM is getting contagious - see Option Maestro at

Monday, March 7, 2011


Although I believe in "laddering" positions monthly to not only receive continuous dividends but ameliorate risk as well ( having cash for buying opportunities), if one wants to fine-tune DITM, they could wait out corrections until a bottom seems to be in, to take new positions. That is what I am doing right now.

That way, stock prices are lower, dividend % are higher, and IV (implied volatility) of Calls sold is more. Conventional wisdom says that this is a minor correction, with a major one coming after the stimulus is over in June.

Right now the farthest I am out is July, hoping to get them called away early.

BTW - With the Wisconsin congressmen leaving the state to avoid a decision, is there some way we can get the Federal Congress to do the same?

Monday, February 28, 2011


Baseball season hasn't even started but I've already hit a Foul Ball and a possible Home Run:

Novartis -NVS- was bought for its annual dividend capture on Feb.16 (ex-D on 2/24), but was called away before the div'd! I still got the option premium of 3 months, which covered transaction costs plus $32 net (3.4% annualized), but I should have got more call premium, more time. Still testing the annual dividend concept!

LO -Lorillard Tobacco has the best of both worlds - high call premium and a great dividend - it went ex-D last week (please remember that this blog is for educational purposes, not touting get-rich-quick plays). LO immediately started dropping, but is still above my sold call level.

Friday, February 18, 2011


Although Chairman Bernancke is taking credit for the latest stock market rally, I'd like to posit that it was all my doing!

For almost 2 years I've been espousing the DITM - the optimal strategy for sideways to down markets, averaging an annualized 10%,which happens to be exactly the same return as the S&P 500 since 1926 (dividends included).

Meanwhile the market has rallied the most in several decades: the SPX is up 100% since March of '09 (Nasdaq up 124%); which is why I mention in my talks to use only a Portion of one's assets for DITM. This achieves the safety of diversity as well as the ability to invest elsewhere (like Spiders, Gold, etc.).

Today's trade was a call-away of my DIAs, which are a good entry point for new investors into DITM. With the DJIA at 12,363 (the DIA at 1/100th of it - 123), my March 103.75 Call was exercised early:

Annualizing over 4 months (multiplying the net % by 3), it very safely returned 8.27%. Not quite 10%, but lower down on the Safety pyramid. If/when the market sells off after its record run, I shall re-enter a position.

Next week I'll be giving another talk to the Golden Gate Univ. Learning Program and Finance Club, which is open FREE to the public. It's on the 5th floor of GGU, Wed., Feb.23 at 5:30.

Monday, February 14, 2011


Over the weekend my Chevron -CVX- stock was taken away just before ex-Dividend. I bought it Nov.4 (3 months, 10 days ago - although I calc'd 4 months for the return); selling the March 80 call - CVX is now 97 - the trade had much downside security, but also made it unfavorable to roll out the call.
An early dividend of $72 plus the $646 call price (Intrinsic and extrinsic) netted me a profit of $231 after all commissions, or 8.17% annualized at 4 months. Not bad.

Friday, February 11, 2011


Overnight the 200 Lilly shares were taken away by the ITM 33-strike call being exercised by its owner. Having done the Buy/Write in early November, the duration was 3 months, or a 4 multiplier for the annualized return of 8.52%, presupposing that I could do the same trade four times, or its equivalent. Lilly closed yesterday at 35.13, 2+ points ITM (in-the-money) with the expiry the third week of April!

Friday, February 4, 2011


Welcome readers from my talk last night to the SF - AAII at the Library in beautiful downtown Orinda. Please scroll down to "older posts" to see actual trading results from 2009 - 2010 that were in the presentation, plus recent closed trades.

I actually had two more this week:

INTC (Intel Corp.) was called away the day before ex-D after having held it for 17 months. Lesson learned here is that to hold it too long produces a lower than average (but still fairly good) return in a low-volatility cycle - 6.1% annualized, vs. average of 11%.

300 shares of INTC were purchased on Oct.14, 2009 at $20.94; it is currently at $21.67, although the last call rolled down was the 18-strike. Total return was $543.

Another stock, 100 shares of Eaton (ETN)was bought at $87.65 in Oct.2010, held 4 months, called away this week at $80 (80-strike price) netting, after all commissions, $384 or 13.1% annualized.

My second experiment in annual dividend-selling paid off (after the Mattel trade in Dec.) with Siemens -SI- although foreign taxes of $100 were deducted. I still netted $193 in less than a month for a 20% annualized ROI. Important to note - the "Delta", or relation of the option to the underlying stock, at the money is usually 50. In other words, if the stock is rising after putting on the buy/write, it becomes more profitable, since the stock goes up $1 and the sold call only goes up $.50.

With SI, I bought it Jan.11 at $119/share; sold the 100 shares on Jan.24 at $125 - it actually kept rising to $131.

Monday, January 24, 2011


Last week's option exaspiration brought only one expiry - NOC. The paucity of transactions is explained by my seasonal fear, coupled with annual vacation away from the market, that few trades were entered in the early Fall.
Results were great: 13.6% annualized, after commissions. Here is the trade -
May 24, '10 I bought 200 NOC at just above $60 for $12,147;sold the 55 call (almost 10% below), rolled it once into Jan.(last week), called away at 55, for a $1102 net profit in 8 months.
My latest variation I am testing is capturing semi-annual and annual dividends with a 3-4 month ITM call to keep from an immediate callaway and additional revenue. It seems logical that getting the whole year at once should be more provident than quarterly. I don't know the tax consequences of this, as most of these - which I got from my acquaintance, Harry Domash of the SF Chronicle - Dividend are foreign stocks.
The annual dividend went ex-D Friday on Siemens -SI - I'll probably sell it in the next few days or weeks, depending on its price action. Long stocks usually rise 2:1 versus the short call, so I'm even more ahead if it rises - selling on weakness.
Stay tuned!

Saturday, January 8, 2011


The results are in - happily, after adding up the 2009 trades that closed in 2010, and also the 2010 closing in 2010, the average percent combined was exactly the same as the DJIA for the year, with a lot more safety via the ITM calls! The 11.06% was a combined total of 13.27% for the 2009 opening trades and the 8.85% of the ones in 2010 - thanks to torpedoes of BP, UVV ( a tobacco company that tanked on earnings), and a misstep into the TLT (twice).

Since the DITM is designed to accommodate all markets but the BEAR (20%), the May FlashCrash was not a problem. 11% also happens to be about the historical average of stocks for over a century, and certainly much of an improvement over the past "Lost" decade of flat returns - with the expectancy of similar returns for the next decade.
The returns were calculated by averaging percentages, rather than total debits/credits, since the 5-6 month trading duration involves using the same dollars more than once, making an annualized number impossible.

The next variation will be to ladder annual and semi-annual dividends captured with a ITM call each month. Harry Domash of Dividend Detective (and the SF Chronicle) has kindly sent me a list to screen.

Monday, January 3, 2011

10/13/2009 NM 1000 5 5009 16-Dec 7-Jan 5.40 0.06 60 NMCA 802 4991 844 40.40% NM
10/21/2009 DD 100 34.01 3410 12-May 11-Jun 4.84 0.41 143 7/17/10 30 435 420 495 2991 173 8.70% DD
11/23/2009 LEG 300 19.8 5949 11-Dec 15-Jan 5.33 0.26 78 LEGCW 808 5241 178 12.00% LEG
11/24/2009 LMT 200 77.06 15421 25-Feb 26-Mar 3.26 0.62 252 LMTLO 520 560 1088 14991 870 16.92% LMT
12/7/2009 HUN 500 10.68 5349 11-Dec 31-Dec 3.78 0.10 50 HUNBI 1011 891 partial100 >>>>>> HUN
12/7/2009 HUN closed 3591 194 14.50% HUN
12/11/2009 XLU 200 31.64 6337 18-Mar 30-Jun 3.90 0.31 253 9/18/10 30 396 62 240 XLU
XLU 17-Dec 318 416 5991 579 9.14% XLU
12/18/2009 DVY 200 43.78 8765 22-Dec 28-Dec 4.16 0.40 86 DYVFN 934 7991 246 11.20% DVY
12/22/2009 PM 100 49.46 4955 9-Jul 4.71 0.58 174 9/18/10 45 414 0 240 4491 364 9.79% PM
12/22/2009 DRI 200 35.96 7200 7-Jan 1-Feb 2.81 0.25 50 DRIDM 810 6591 251 10.50% DRI
12/30/2009 TLT 100 90.37 9046 29-Jan 5-Feb 3.91 0.32 0 Mar.87 406 8691 51 6.77% TLT

12/30/2009 VZ 200 33.39 6687 7-Jul 2-Aug 6.13 0.48 190 Apr.31 506 0 242 5691 VZ
7/9/2010 VZ 200 26.69 5372 7-Jul 2-Aug 95 VZ1.Oct.24 918 0 4560 VZ
7/6/2010 FTR 48 0-spin 0 part of VZ 10 328 FTR
7/9/2010 FTR 100 7.4 740 part of VZ 231 48FTR
7/9/2010 FTR 300 48FTR
296 vz/ftr
TOTAL: 84240 1441 7960 1360 2721 74386 4046 4.80% 86508
7/9/2010 FTR VZ/ftr TOTAL 12800 295 1424 0 242 11135 4.60% 4FTR
January 2010 56739 2009 Total January 2010
1/29/2010 BP 100 56.57 5666 10-Feb 7-Mar 5.86 0.84 84 Jul.50 721 109 4420 .ls-550 9.70% BP
2/2/2010 ETN 100 64.97 6506 5-May 28-May 3.12 0.50 100 Jul.60 736 5991 321 9.87% ETN
2/9/2010 WM 200 31.75 6359 28-Feb 18-Jun 3.70 0.29 189 Jan. 30/11 568 622 804 5991 571 10.80% WM
2/26/2010 MRK 200 36.95 7400 11-Mar 8-Jul 4.16 0.38 152 Oct.34 758 410 600 6791 491 11.40% MRK
3/25/2010 ABT 200 53.63 10735 15-Oct 15-Nov 3.27 0.44 176 Jan.46 880 0 1000 9191 512 8.20% ABT
3/25/2010 UVV 200 54 10810 8-Apr 10-May 3.47 0.47 94 Aug.50 1250 190 7991 .ls-1665 15.40% UVV
3/26/2010 NUE 200 45.93 9196 28-Sep 11-Nov 3.27 0.36 216 Sep.39 1058 0 330 >>>> NUE
3/26/2010 NUE 200 45.93 Jan.37 366 985 7391 418 6.06% NUE
5/12/2010 DIA 500 108.85 54434 sept. Mnthly 2.40 .20m 524 Sep.102 4671 50991 1752 9.66% DIA
5/24/2010 CTL 200 33.57 6723 4-Jun 21-Jun 8.50 0.72 145 Oct.35 182 0 6991 595 26.60% CTL
5/27/2010 KFT 200 28.79 5767 28-Jun 14-Jul 4.08 0.29 58 Sep.27 508 0 5391 190 9.88% KFT
6/1/2010 BP 200 38.05 7617 5-Aug 21-Sep 7.82 0.84 Oct.35 1218 930 6945 .ls-546 7.17% BP
11/13/2009 BX 300 15.27 4590 11-Mar 31-Mar 7.88 0.30 210 6/19/10 12 892 356 742 rollout BX
BX 10 2946 .loss-166 BX
5/7/2009 GDX 200 36.7 7349 0 22 6/19/10 40 1468 2344 1842 7991 1630 20.50% GDX
6/25/2010 EIX 200 32.8 6569 28-Jun 31-Jul 3.77 0.31 126 Oct.16 30 649 0 5991 197 9.00% EIX
7/14/2010 PFE 400 14.92 5977 4-Aug 1-Sep 4.87 0.18 0 Dec.13 881 5191 95 19.07% PFE
7/14/2010 CAT 100 65.55 6564 16-Jul 20-Aug 2.64 0.44 44 Nov.60 879 5991 350 21.30% CAT
7/28/2010 IYR 200 52.09 10427 24-Sep Sep.30 3.45 0.45 93 Jan.48 1226 9591 483 11.10% IYR
8/2/2010 DD 100 41.65 4174 6-Aug 10-Sep 4 0.41 41 Jan.37 571 3691 129 12.40% DD
10/25/2010 TLT 300 102.13 30648 1-Nov 7-Nov 3.6 .32M 96 Mar.98 1648 521 3.2 28251 1174ls TLT
12/3/2009 DUK 400 17.31 6933 5/19 16-Jun 5.60 0.25 290 Jul.16 101 0 328 6391 302 4.75% DUK
7/16/2010 DUK Aug.11 16-Sep Jan.16/11 372 497 see above DUK
11/29/2010 MAT 500 25.54 12779 1-Dec 16-Dec 3.23 .83an 415 Apr.24 1051 1244 12781 224 21.00% MAT
TOTAL: 227223 3075 21916 7464 7128 206899 4705 2.07% 4331
2009 buys 84240 1441 7960 1360 2721 74386 4046 4.80%
Trades Closed in 2010: 311463 4516 29876 8824 9849 281285 8751 2.80%