Thursday, April 26, 2012


As I said in my presentation, CLF (Cliff Resources) has a nice profit and safety net, so that a put or put spread might be a good idea for Safe Investing. Since I'll be going on vacation (to the REAL casinos) for a few days, I put on a May 18 put spread on CLF: BPO May 57.50; SPO May 55 for a debit of $.30. Max return is $2.50- less .30). Apparently revenues were off slightly, although EPS was great (one-time gain). Support seems at $63, so it bears watching.
Not sure if I want to continue testing on the Annual Dividends I've been doing - 3 years now, but infrequent and few. Upside is you get the whole year dividend at one shot - downside is you cannot roll out to the next Q (no div'd!). VALE - an annual but proved semi this year with the special div'd- if the price holds up- looks like a 22% annualized gain by June.
NVS, currently just under water, would net my average - 10.4% over 5 months to July. Stay tuned!

Tuesday, April 24, 2012

Sometimes the Bear Gets You:

Took my first loss in over a year - I should stay away form Energy ! Just as BP got me in 2010, Enerplus (ERF) went Enerminus in a downward spiral. I thought it was just the Nat.Gas decline, but it looks like they cannot support the monthly dividend. As it was, I lost 1/2 of what I would have just holding the stock (from 29 and 31 to 17 !).
The good news is I put on a B/W (buy/write) on Seagate - STX. Return looks much better than INTC.

Monday, April 16, 2012


Sometimes you get the Bear - sometimes he gets you. Occasionally, being human, we make mistakes - hopefully small ones. Once in a great while it gets reciprocated. My latest trade, on CLF (Cliffs Resources) showed a huge Call premium for the Oct.option. Although it doesn't go ex-D for another week I jumped in - estimated annual return (unless Coal falls off a "Cliff") - 70%!!! with a 6-month position. I did a second order which they corrected (45% annualized) in another account, but now I see the original quote on the Oct.$62.50 is back. What's wrong with this picture? 65 Delta, 47 IV.
I usually stay away from "Hot" issues - coal has been much in the news lately- but the safety net is huge.

Thursday, April 12, 2012


Those readers who followed my lead into VALE, remember - tomorrow (Friday the 13th) is the last day to do the Buy/Write to get the semi-annual dividend of $.5885, or 5.25% annualized (while buying back the Put if it was sold). It has been a fun ride for those of us who sold Puts during the interim; fortunately VALE is up today above (my) strike of 23 on higher energy stocks.
One of the many arrows in the positive quiver of DITM is that - if the Put had gone south in a sane manner (no BPs, please), although you might lose a few $$ on buying it back, you would be buying the stock at a CHEAPER price, and the dividend % would be higher - look at the bright side!
Other semi-annuals to check out coming in May: TEF and VOD (do own research on these, as well as foreign income tax in deferred accounts:
Annual dividends in May include ABB, CS, SNY, STO. Pure "Hummingbird" stocks, no rolling Calls forward.

Tuesday, April 10, 2012


It appears that the Talking Heads and Scribes of the media(those sage advisors such as Poppy, Trish, AJ, BK, Jimmie, "Judge" Wapner and the other Mad Men ) have successfully got all the sheep into the pen via Bullish optimism of Europe and the U.S. Economy - time to get the shears out now. Hedge funds as a whole lost 8% in October and about 1% for the 3 months thereafter - meaning they have a huge hole to dig out from before they can even make money for their remaining clients and themselves.
Although the DITM strategy was not the optimal one for the past quarter, it did extend the cushion on existing positions - well needed the past five days and counting. Although there may be some at least temporary Resistance around these levels, there is no rush to get into new Buy/Write positions; rather the farther down they go, the better it is for DITM for the 3 reasons it likes: lower stock prices, higher dividend %, and higher IV (Implied Volatility, or Call price).
In my small IRA - the purist of DITM testing, fully invested with no minimum withdrawals or contributions- it continues to climb to new all time highs - up 2.78% for Q1, or 11.12% annualized. Called away recently were BMY -Bristol Myers- at $30 for a 9.09% annualized return (9 months holding); and DOW - 22.47% annualized for 3 months (seems like the shorter the holding the better the return, despite more micromanaging and commissions).
Those holding COP -Conoco Philips ( I don't) be aware of the spinoff of Philips Pete soon. Calls can get sloppy with adjustments.
Several positions in the family portfolios are slightly "under water", but much less than if purchased sans DITM:
SCCO - So. Copper- was bought at $35+, but the Call was sold at $32 - it is now $30. I can continue to hold, receiving the dividends and milking the Call . To repeat, I've only had 5 losses in 3 years (remember BP!!).
Finally, VALE is a tossup. Several people, along with myself, sold puts to take on the stock, which goes ex-D April 16, so it must be bought (in a buy /Write) by Friday the 13th. Depending on the price that day, one can close out the put and B/W or not .

As some readers know, I've recently been accepted to write a column for the
They have a new program called "The Week Ahead" where I intend to note upcoming local investment meetings - options, TSAA, Commonwealth Club (where I saw Robert Shiller last week), You can subscribe to the column if you like, as I won't be emailing alerts each time.