Friday, December 12, 2014

Game Stoploss

Despite aforementioned disappointment at the lower Volatility causing a switch after 5 years from DITM to the Leap Strangle strategy, I continue to test it in my small IRA, but with 1/2 of the funds in cash until the end of this downturn - which I expect any day, with an upsurge into NY Day and beyond. My column:, extols the virtues of 2015 technically and cyclically - feel "free " to read and even Subscribe weekly to it if you like. It is now in its third year, as the DITM is in its 10th.

A good example of why I like DITM as well as Leap Strangles for double digit returns as well as Safety! is the blood-letting in many metal and energy stocks, but also Gamestop - GME.
In my IRA I note that the stock is down from my buy price - $39- t just below $33 on 200 shares (normally a $1200 paper  loss! According to my Schwab EDGE platform, having sold the 2016 40 strike (actually OTM when sold) , the profit on "milking" the premium is $1130 - so, adding $265 in dividends, the position is actually about even, if closed out today. Strangles work the same way, but add Sold Puts to the equation.

Remaining DITM positions include GE and INTC. 

Thursday, December 4, 2014

LEAP Update

As the new year approaches, and the 2nd anniversary of my LEAP Strangle strategy implementation I am starting to record the results great and not-so-great as the first batch -2015- are due to expire. With the opening of the 2017 Leaps this Fall, almost all Calls and Puts have been rolled (Out, up and Down).
Today's rollout was on Ford (F) which was bought in January 2013 - 23 months ago:
Cost: 200 shares at $13.69 : $2738
Profit from dividends and options: $1330
Current Price $15.83: $3166
Profit if closed out: $1276, or 46.4%
Instead I rolled out both Puts and Calls for $214 and $268, respectively- another $482. So if F stays UNCH until January 2017, profit is $1758 or 64% over 4 years, or 16%/year with no monitoring or fine-tuning.
The best part is the safety net provided by funds brought in: there would be no loss unless F dropped below $7/share (dividends included).

Not so profitable have been my mistaken positions into Gold and Energy, which still have time to play out as they are rolled down and out.