Option to Profit
Week in Review
August 31 – September 4, 2015
|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED||EX-DIVIDEND|
|3 / 3||0||5||0 / 0||3 / 0||0||8|
Weekly Up to Date Performance
Another miserable week for the overall market and another miserable Friday to end the week.
Coming just 2 weeks after the worst week in 4 years, you have to wonder why we bothered with the week in-between. That week brought us out of officil correction territory, while this week brought us right back.
There were 3 new positions opened again this week, digging further into personal funds, effectively functioning as margin. Those new positions out-performed the adjusted S&P 500 by 4.2% and the unadjusted S&P 500 by 4.5%. While the past few week’s new and existing positions have been out-performing, the difference was that last week the out-performance was more than simply in relative terms, as positions gained for the week. This week, however, we were back to out-performing in relative terms, but losing net ground, nonetheless.
New positions were 1.1% higher, while the adjusted S&P 500 lost 3.1% and the unadjusted S&P 500 lost 3.4% during the week that some misery compounded, despite an attempt to bounce back during the mid-week.
Existing positions finished the week an unusually large 2.5% higher than the S&P 500, but that didn’t really make up for their overall 1.3% loss for the week.
With no assignments once again, the 46 closed lots in 2015 continue to outperform the market. They are an average of 5.0% higher, while the comparable time adjusted S&P 500 average performance has been 1.3% higher. That difference represents a 283.3% performance differential.
This week was another one that was simple to describe. As has been the case all too frequently lately, it was a terrible week.
Last week was easy to describe, as it was simply terrible.
The attempt to bounce back from early week losses was far too little and without backbone.
More and more it looks as if those nice moves higher are what they have historically been. Nothing more than something to suck you in as a bear market is developing. Whether there is another 9% or more to the downside, I don’t know, but I don’t think that will be the case.
While there hasn’t been the typical “buying on the dip” with the declines seen over the past month, I’ve started adding positions.
While I feel good about those new positions, especially if they’re coupled with dividends and better than the kind of premiums that have become the “new norm,” it is telling just how quickly their impending assignments just evaporate into thin air.
With just one day left to the week I thought that there was a very good chance of at least getting 2 assignments. Instead, there were none. Luckily, all 3 positions opened this week could be rolled over fairly easily and with a little bit of expiration date staggering, as well.
While the market hasn’t been very investor friendly lately, where there do appear to be opportunities the returns can be better than in a market that moves higher. The premiums and dividends can be very nice, especially if there’s also some capital gains on the shares as part of the equation.
Fortunately, this week was a good one as far as income generation goes. With 8 ex-dividend positions, 3 new positions opened and then 5 rollovers, it almost felt like old times again.
I felt the same way last week, but that is frequently how it feels when the volatility decides to play along. It does tend to be much more fun, even if the overall market is going lower. The ability to out-perform in a down market is something that most agree is a critical component of long term investing health.
That old saying about the market being able to stay irrational longer than you can stay solvent is less likely to be true when you can cushion the paper losses with income of any sort. The past month or so has really reflected what additional income streams can do during a period of market weakness.
For the coming week I’m still willing to dip into my additional funds and do what Donald Trump does, by giving myself a loan to make more stock purchases. I’d rather do that than risk a margin call. At least I have my better interests at heart. I’m not certain that I could say the same about my or anyone’s brokerage.
However, while willing and while there are a number of good ex-dividend positions next week, I still would rather see some opportunity to rollover existing positions, especially those expiring in 2 weeks when the September 2015 cycle comes to its end.
With only one position set to expire next week, there isn’t too much additional income that could accrue from that position, but at least there are a number of ex-dividend positions, as well.
The big question will be what will China’s markets do after taking a few days off and what will ours do, perhaps in response after we’ve had the additional holiday day to fall behind the curve, if China goes off the road.
For now, I won’t think about any of that and instead look forward to a nice, quiet week and a happy and safe Labor Day to everyone.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: GE, MOS, HPQ
Puts Closed in order to take profits: none
Calls Rolled over, taking profits, into the next weekly cycle: GE
Calls Rolled over, taking profits, into extended weekly cycle: BBY (10/9)
Calls Rolled over, taking profits, into the monthly cycle: HPQ, MOS
Calls Rolled Over, taking profits, into a future monthly cycle: UAL (12/18)
Calls Rolled Up, taking net profits into same cycle: none
New STO: none
Put contracts expired: none
Put contracts rolled over: none
Long term call contracts sold: none
Calls Assigned: none
Calls Expired: BAC, CSCO, IP
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: HAL (8/31 $0.18), HFC (8/31 $0.33), COH (9/3 $0.34), BAC (9/2 $0.05), MOS (9/1 $0.28), JOY (9/2 $0.20), HPQ (9/4 $0.18), KSS (9/4 $0.45)
Ex-dividend Positions Next Week: NEM (98 $0.025), GM (9/10 $0.36), KO (9/11 $0.33), BBY (9/11 $0.23)
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, ANF, AZN, BAC, CHK, CLF, COH, CSCO,FAST, FCX, GDX, GM, GPS, HAL, INTC, IP, JCP, JOY, KMI, KSS, LVS, MCPIQ, MOS, RIG, WFM, WLTGQ (See “Weekly Performance” spreadsheet or PDF file)
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