Friday, July 27, 2012


The most recent activity in my DITM was outwaiting Waste Management's latest foray into the dumper- from its high  near $40 in 2011 to $27 a few months later.  My trade was an egregious example of how to make a loser become a winner, while earning money doing it. I bought it in May of 2011 at $38.40 and sold the 36 ITM Call 6 months out; as it flushed its way downward, I "stepped down" each expiry until finally this week selling the 32-strike for October '12. If called away then, my net will be $430 instead of a loss of $1200 (200 shares).
Other calls that expired worthless in July were MCHP, ETN, and AYR, and if this recent rally pops them above my previous strike price, I shall step down on these as well.
With another month almost over, and with the recent two day rally popping almost all my position above water, my small IRA - the pure microcosm of DITM with no recent deposits or withdrawals- just hit an all-time high again! Now at $41,450, it has risen over $10,000 since my DITM strategy started in May of '09- up 33%. Not bad for a conservative, safety-net strategy designed to beat zero interest rates.

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