Wednesday, March 28, 2012


Per usual, the day before ex-dividend date NUE (Nucor Steel) was called away at 40. Including the 40 put I sold in December, profits after commissions were 17.72% annualized (based on a 4 months holding period). NUE rose with the market from October, then went into a Trading Range after topping near 46 in March - it was 42 when called. Definitely a winner!

Monday, March 19, 2012


If anyone did the TLT trade that I outlined recently, it has dropped dramatically to just below the call strike of 111. Last Friday, fearing some kind of wild breakdown in Treasuries, I bought a hedge: 200 TBT for each 100 TLT. This will mostly offest the decline, while still getting 100% of the return - monthly dividends and call premium. Probably not a great trade, for single-digit returns. Beware: although this freezes the TLT price (down on the TLT and up on the TBT, highly correlated), you must put a stop on the TBT, because the freeze melts above the call strike (remember - no appreciation on the TLT under DITM).

Under capitalism man exploits man; under socialism the reverse is true. ~Polish Proverb

I just closed out the Siemens trade today (unfortunately it was in my family's account, not mine!). The ANNUAL dividend of just under $400 was captured in mid-January ( $100 went to foreign income tax which can be deducted from IRS). Even without this amount: Cost was $9620 f0r 100 shares, I closed it out early from an April call leaving a few $$ on the table. Profit was $423, including $809 for the sold call. Net was 4.4% for 2 months, or 26.4% annualized. Not bad considering a 6 point safety net.
Other B/Ws (buy/writes) were done in March on PEG and WMB; and the put sold on VALE, which is a semi-annual dividend in April.
Although I violated my 3% rule, I sold a put on NEM after the gold selloff (2.6%) because I really wanted the stock. I may overwrite the call if put, not DITM.
I've been accepted to write a financial column for the online:
Upcoming columns will feature GGUniv., TSAA, and the SF Bay Area Options group, as well as other Bay Area groups. Examiner prefers local interest and photos!

Tuesday, March 6, 2012

Do It To Me: The Hummingbird Stragety

I don't feel old. I don't feel anything until noon. Then it's time for my nap.
-- Bob Hope

The thing I like about DITM is that it is neither Day Trading (which is very difficult to do consistently with profits), and BYE and Hold (See First Solar, which went from $320 to $20 in four years).
The Hummingbird chooses the prime flower, drains it, and moves on. So was it with TAL, which I only held for a little more than 3 months, since the April call was assigned just before ex-Dividend today. Two reasons for early assignment: imminent ex-D, and a stock run up - both of which happened to TAL. Bought at the end of November for $5163 (200 sh. incl. commission), I got one 8% dividend ($104) call sold, ($798) and early callaway of stock for $4491. Total for just over 3 months: $230, or 13.36% annualized.
Some of us have discussed VALE, which has a semi-annual dividend going ex on April 16. Rather than buying it, thanks to a market/stock selloff today I was able to sell an April ATM put, then hopefully do a buy/write next month!