|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED|
|3 / 3||2||12||3 / 1||0 / 0||0|
Weekly Up to Date Performance
July 7 – 11, 2014
New purchases for the week beat the unadjusted S&P 500 by 1.4% and surpassed the adjusted index by 0.9%
The market disappointed for the week just as it did a few weeks ago despite having rallied on Federal Reserve reassurances to close the prior weeks.
For a change the market didn’t set new record upon new record and instead had people talking out loud again about the correction that most rational people believe will becoming, but are still uncertain whether it will be coming in anyone’s natural lifetime.
New positions continued to be minimal in number and they didn’t have to do very well to surpass the performance of the overall market. It was a week when mediocrity was far better than the averages. As always whenever there is a small number of new positions all it takes is a single over or under-performer to diverge from the broad market. This week that wasn’t the case. Instead those new stocks had their performance buoyed by their premiums, which is what it’s all supposed to be about.
New purchases were 0.5% higher during a week that the market lost 0.9% on an unadjusted basis and 0.4% on an adjusted basis.
Performance of positions closed in 2014 didn’t change very much, but they continue to out-perform the S&P 500 performance by 1.4%. They were up 3.4% out-performing the market by 67.1%.
For the first time in a very long time I actually had a plan and stuck to it.
Usually I have a plan but you never know how that first tick of the week will go and how things unfold. It’s always a good idea to have a Plan B, especially since that is most often the one that becomes the primary approach for the week.
Plan B is what was followed with the second trade in shares of Chesapeake Energy for the week. There was some arbitrage going on and it looked as if there might be an opportunity to buy shares, sell calls expiring the same day, roll them over and then sell next week’s in the money calls in the anticipation of shares being assigned early today to capture the dividend, as shares are trading ex-dividend to open the coming week.
That plan would have delivered almost a week’s worth of ROI in just a single day and without the need for the dividend to contribute to that return.
That remained the plan until the arbitrage interest disappeared as shares started trading below $28.42 and the price started to shrink even more. So plan B just simply rolled those shares over to next week to secure the dividend and start the process all over again.
I would have been more excited if Plan B wasn’t engaged, but it’s usually preferable to Plan C.
Otherwise, using Plan B wasn’t the case this week, much to my surprise, as it was yet another week where there was absolutely no follow through to the boost provided by Janet Yellen the week earlier. A normal, rational thinking person would have suspected that maybe, just maybe, stocks would rise in continuation of the confidence inspired by the Federal Reserve.
But still, even with some optimism, Plan A was to try and hold off on spending too much and try to make the week’s income by concentrating on existing holdings. That’s been the plan for a while, but this week it seemed to come together better than in past weeks.
The hope that the plan this week would actually come together was more related to the fact that there were many positions due to expire this week and were at risk because of Wednesday’s FOMC release and the potential adverse reaction to the release.
So the plan was not to spend too much money, look for forward week expirations and try to rollover whatever was possible in advance of the FOMC, so as to not get overwhelmed by bad news or frightened investor behavior.
As it turned out the FOMC was benign, but the day after was anything but benign and had absolutely nothing to do with the FOMC.
Just like the script read.
Not really, but it worked out well in a week that didn’t do too much to inspire confidence.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: CHK, CHK, RIG
Puts Closed in order to take profits: none
Calls Rolled over, taking profits, into the next weekly cycle: BMY, BMY, CHK, HFC, WFM
Calls Rolled over, taking profits, into extended weekly cycle: DG, EBAY, FDO, FDO, GPS, JPM, KSS
Calls Rolled over, taking profits, into the monthly cycle: none
Calls Rolled Over, taking profits, into a future monthly cycle: none
Calls Rolled Up, taking net profits into same cycle: none
New STO: EBAY (8/1), KSS (7/25)
Put contracts expired: BBBY
Put contract rolled over: none
Long term call contracts sold: none
Calls Assigned: GM, MA, PFE
Calls Expired: none
Puts Assigned: none
Stock positions Closed to take profits: none
Stock positions Closed to take losses: none
Calls Closed to Take Profits: none
Ex-dividend Positions: GPS (7/7 $0.22), DRI (7/8 $0.55), FCX (7/11 $0.31)
Ex-dividend Positions Next Week: CHK (7/11 $0.09)
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, BMY, C, CLF, COH, EBAY, FCX, HFC, JCP, KSS, LULU, MCP, MOS, NEM, PFE, PBR , RIG, TGT, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)
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