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 Examiner.com: http://www.examiner.com/stock-market-in-san-francisco/brent-leonard
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), et.al. You can subscribe to the column if you like, as I won't be emailing alerts each time.

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