Monday, September 23, 2013


As I mentioned in my Examiner column:

DITM has gone into "Stall speed" - still beating Zero rates, but the Volatility caused by an artificially rising market has brought down the average return, as well as activity.
This time of year I usually go on weekly vacations, since it is the worst two months (usually) of the year, and I rather be underinvested, looking for better entry points.

Ergo, I let some positions get called away, rather than roll them forward:
DOW, which had been held for 15 months - usually this means lesser overall profits the longer it is held- actually returned a nice annualized 12.28%, around the average. It took a little tweaking, rolling down, and then up, scalping a few more $$.
My DVY position ran too far to roll, so was called after only 3 months,  with a 7% annualized return. ESV also expired its call, but it has dropped slightly below its call price, so I'll just keep taking the dividend until it rallies.
 Finally, August callaways were LO, for an 8% gains; LMT (only 5.4%); BBY 19% even though the callaways were in 3 staggered lots.  

For now, I am mostly concentrating on my LEAPS strategy, now that the 2016 Leaps are out.
In October (26th) at Fort Mason I am giving a talk to the San Francisco Bay Area Options Group on both LEAPS and a DITM wrapup. 

Friday, September 6, 2013

DITM update

Yet another first for DITM: on Feb.21 of this year I bought 300 shares of BBY @$17 for $5133; they have now been called away in separate tranches of 100, making accounting complicated - so I averaged the time period at 6 months, surrounding Aug. Here is the result:
Bought: $5133, sold 3 June16 Calls for $685
100 called for $1591; rolled UP to Sep.22 for a debit of  $1122 - one must be very careful about rolling up for debits, since they can come back down for a loss. Another hidden benefit of a Bull market is additional profits by rolling up the strikes, and BBY really ran up.
Aug.30 and Sep.5 (just before ex-D) 2 100 lots were called, each $2191 (times 2) - provoking 3 commissions, not one. Dividends received were $85. Net profit for 6 months (sic): $488, for a % of  9.5%, annualized at 19%. (The $1122 is built into the debit). Not bad.

Still, it falls short of the new strategy that I'm using for another portion of assets - the LEAPS strategy that I wrote about this week in:

LEAPS offer 20 to 60% with less monitoring, fewer commissions - still using the safety of covered calls.