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 !

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