Monday, February 25, 2013

MARCH MADNESS



As reported in my last blog, Sentiment is flagging Caution, so for the first time in awhile, I'm not reinvesting, although I keep looking for DITM candidates from SeekingAlpha.com and Barron's. Over the weekend my 100 shares of Six Flags (SIX) got "waved" away: Bought/Wrote on November 1of last year, the four months netted a 15.68% annualized gain. Bought SIX at $56.55 ($5664 incl. comm.), sold the Mar.55 for $379 - called away at $5491 ($9 comm.).

 I still have laddered positions out mostly to June (plus 1 July - VNR).  So far in 2013 - no losses (knock wood).

Thursday, February 21, 2013

That's What I'm Talkin' About

Last week's expiry brought a quickie - GE getting called away very early (one of the great questions I got in  my talk to the SF Options Group). Since profits are capped by the covered calls, losses must be kept to a minimum to balance them. However, surprises occur on the upside as well. The GE trade, put on in mid-December, only lasted two months (1 dividend) but garnered just over 20% annualized from the June call which was exercised for some reason. GE was bought at 21, call sold at 20, yet the stock is only 23 today. With an expected correction upon us, I'll wait for a further investment.
Also, part of my MCHP was called away after its run up (finally). It was the 27 strike call - the 34 remains.
My sentiment blog has warned of a downturn (as has the media), so I've put on a SPY put spread and the SDS inverse SPY to hedge. So Far....

Monday, February 18, 2013

DITM History

The table below is from the talk to the SFBAOG last weekend (see prior post: GOOD DAYS,BAD DAYS)). a nearly four year history of trading the DITM strategy:




DITM Deep- In- The- Money







Date opened # #
Avg. #
From To Stocks Months Return Losses
May.'09 Dec.'09 18 3.7
18.33% 0
Oct.'09 May.'10 22 5.1
9.45% 4
Aug.'09 Nov.'10 14 7.5
9.84% 0
Oct.'09 Nov.'10 12 4.5
9.95% 2
Nov.'10 Apr.'11 14 2.5
13.32% 0
Jan.'11 Oct.'11 23 3
11.31% 0
May.'11 Dec.'11 20 5
9.31% 2
Jan.'12 Nov.'12 21 4.5
6.19% 4

TOTAL 104 35.8
59.92% 12

Avg/Yr. 17 4
10.00% 1.33

GOOD DAYS, BAD DAYS



If one chooses to only remember the sunny days instead of the rest, the happy days but not the sad - then one can say 2012 was not the best year for DITM, compared to the previous three. If a mistake was made, it was overinvesting in Energy and Materials  stocks, which had good dividends and juicy call premiums, and the hope of "Fracking", etc., to lift stocks such as symbols PGH, PWE, VALE, CLF, and ERF.  Ergo, it vastly underperformed the SPX on the year.

Although most went slightly under water ( below the In-The-Money call option sold) and was held on to with normal covered call rollouts of the same price, enough (four) were sold at a loss, bringing the year down to a less-than-average return of just over 7% (still much better than MM funds, CDs, etc.).

As the end of four years of testing/investing DITM ends in May, I was asked to update results last weekend before the San Francisco Bay Area Options Group. Below is posted the 2012 results ( both opened in 2011 and in 2012, but closed out in 20120; also  the "annualized" results of other time frames, totaled.

Finally, and best of all, is the result of actual trades in my small IRA from the start of DITM in May of 2009 - a microcosm of DITM with no contributions or distributions, losses, experiments - such as capturing stocks paying annual dividends with an ITM call- and the beginning learning curve. 


OPENED 2011 2012 DITM
DATE: SYM #MOS. ANN.%
5/24/2011 WM 17 5.66%
6/27/2011 BMY 9 9.09%
8/20/2011 DIA 8 6.06%
8/20/2011 MAT 7 8.56%
7/21/2011 LO 7 16.00%
9/16/2011 PM 5 13.77%
10/12/2011 COP 4 12.33%
10/25/2011 EPD 3 5.56%
10/26/2011 LLY 4 9.65%
11/1/2011 INTC 2 15.75%
11/28/2011 TAL 3 13.36%
12/1/2011 KMB 9 10.13%
12/1/2011 SDRL 9 10.13%
12/5/2011 MRK 3 9.55%
12/16/2011 NUE 4 17.72%
12/27/2011 DOW 3 22.47%
5/16/2011 CVX 8 10.77%
5/20/2011 NOC 8 8.00%


TOTAL%: 204.56%
5/10/2011 TOT 8.. 9.37%loss
5/20/2011 SVU   8.9%loss


TOTAL%: 18.27%


TOTAL: 186.29% 
div.2= 9.14%
#TRADES: 20 9.31%
******** OPENED 2012
1/3/2012 VZ 6 8.06%
1/19/2012 SCCO 8 18.20%
2/21/2012 JNJ 5 5.00%
2/21/2012 NVS 5 10.40%
2/27/2012 TLT 3 4.31%
6/5/2012 PEG 6 10.33%
4/19/2012 MAT 4 10.92%
4/24/2012 STX 4 16.45%
4/27/2012 LLY 4 8.93%
5/1/2012 APL 6 23.80%
5/22/2012 SDY 4 7.82%
5/25/2012 SFL 4 16.29%
6/11/2012 HUN 3 40.00%
6/19/2012 IRM 3 5.60%
7/16/2012 QRE 3 14.87%
8/7/2012 AHGP 3 14.19%
4/19/2012 LINE 12 8.24%

TOTAL%:   223.41%




2/1/2012 ERF 4 39.05%
9/17/2012 VALE 2 7.73%
4/16/2012 CLF 2 18.89%
10/18/2012 CLF 2  
11/13/2012 PGH 3 27.09%

#months 96 92.76%

23.19% avg.mo: 4.5mo.
TOTAL: 130% #TRADES: 21





YEAR(Open) #trades net%
GRAND 2011 20 9.31%
TOTAL 2012 21 6.19%
full year
41 15.50%
average 21 7.75%