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.

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