Thursday, June 21, 2012

2011 UPDATE:

As we near the end of the first 6 months of 2012 it is time to report the results of DITM trades  that were opened in 2011 and closed out in 2012. That amounts to 18 trades; total earnings were $6626 and the 2 losses were $1035. Average holding time: 5 months.
Annualized % of wins only: 11.6%
Annualized % of wins less losses ( arbitrary number since you don't keep annualizing/reinvesting losses):9.3%.
Just about where every other measurement of DITM has been for over 3 years.
I was going to also present trades opened and closed in 2012, but of the 24 existing positions only 2 have been closed out YTD. This includes one win - TLT- and the Big Loss of CLF, which was finally closed out at the low trade of the year ($44.50)- it is now $51. The 24 current trades are close to ATM (at-the-money).
At expiry, positions above the pre-sold strike will be called away or rolled out, if profitable.
Positions ATM can be rolled DOWN 5-10%, resulting in 100% profitability, and higher dividend % due to lower cost basis (sans loss of principal).
Positions just under strike will probably have the same strike call sold ABOVE the stock price, a la normal covered call strategy - hoping to get called away 4-5 months hence.

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