Option to Profit Week in Review
March 3 – 7, 2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
5 / 5 2 7 5 / 0 2  / 0 2

    

Weekly Up to Date Performance

March 3 – 7, 2014

New purchases lagged the time adjusted and unadjusted S&P 500 this week by 0.2% during a week that pulled out yet another new high to most everyone’s surprise as a day that looked as if it was going to end up on the loss column was turned around when no one was watching..

The market showed an adjusted gain for the week of 1.0% and unadjusted gain of 1.0% for the week, while new positions gained only 0.8%.

For positions positions closed in 2014, performance exceeded that of the S&P 500 by 1.4%. They were up 3.3% out-performing the market by 71.7%.

The week got off with a bang, but only figuratively, as worries about a part of the world that most people have never heard of got European markets nervous first and then spilled over to welcome in the week in the US.

As so often is the case, whether with markets or individual stocks, it doesn’t necessarily take news to see big movements. The very next day, with no concrete news of any kind, the market just simply reversed itself and then provided a substantial cushion as we just went right back to new highs.

The one surprise of the week was that despite there being an Employment Situation Report the market almost didn’t end the day on a positive note, although it was up strongly for most of the day and then finished with a little flourish in the final 20 minutes.

The week, still, was true to the pattern that began more than a year and a half ago.

While there was a nice mix of trades this week, including new positions, rollovers and some new covers I didn’t find it to be a terribly satisfying week as it was difficult to get a feeling for what the real sentiment was as Monday and Tuesday went in completely different directions and the rest of the week was without any thematic presence.

Not that I really care about thematic presence.

Pragmatically, I probably would have been happier if the new positions had exceeded the performance of the market, but sometimes even those kind of weeks aren’t as satisfying as they could have been.

It was, however, another good week for dividends and that appears to be the case for next week, as well.

Of concern is the inability to diversify call contracts by time, as the premiums remain low in the forward weeks. With today’s rollovers all going to next week’s expiration, I will try to find opportunities next week that may look increasingly at the end of the monthly cycle expiration, which is now just two weeks away.

I also would have liked to have provided cover for more positions, but with volatility low the reward for attempting the DOH Trades isn’t as high as I would like, even on a day when I’m not feeling greedy.

At least with the assignments this week there is once again an opportunity to look for new positions or to supplement cash reserves for those looking for that opportunity.

Once I complete my weekly calculations, I think that my cash reserve will be at about 40% and I’ll enter next week with the thought of spending it down to as low as 25%, but events over the weekend may play a role, as we ended this week with some additional uncertainty regarding the situation in Crimea.

While I hate to rain on any party, seeing the market end the week on yet another new high in what seems to be an environment devoid of particularly good news, and then faced with continuing uncertainty in a strange corner of the world, makes it easy to rain on that party.

Yet that strategy of caution hasn’t necessarily served anyone well. That’s usually the case when you try applying a rational or logical approach to things that are far from rational.

Although everyone likes to talk about a rational market, it can be no better than the individuals that comprise it and they don’t always act in rational ways, as those of you that didn’t roll over the AIG shares and still weren’t assigned, can attest.

That strategy of caution is especially poignant as this Sunday is the 5th anniversary of the market’s inflection point. There are reportedly still plenty of people that haven’t been able to get back into the game as caution has prevailed. In the meantime the market is up nearly 150% in that time.

They certainly haven’t been served well by being overly cautious or overly rational approach.

So as the next week is set to begin with prices just getting higher and higher clearly the only action is to ignore rational thought.

While that sounds really, really good, I don’t know if I’ll be able to do that cold turkey.

So next week will likely be no different from any other week, regardless of what is going on.

We’ll probably buy some new positions, keep fingers crossed and try to make it through the week, hopefully saying goodbye to some other positions as the week comes to its inevitable end.

Just like buying and selling the same stocks over and over again the story is unchanged and I’m just fine with the lack of adding another layer to whatever unnecessary  excitement already exists.

 

 

 

 

 

This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as as in the summary.below

(Note: Duplicate mention of positions reflects different priced lots):

New Positions Opened:  FDO, IP, KSS, MET, VZ

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:   AIG, APC, COH, IP, MSFT, SBUX, VZ

Calls Rolled over, taking profits, into extended weekly cycle:  none

CallsRolled 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 cyclenone

New STO:  INTC, WFM

Put contracts sold and still open: none

Put contracts expired: none

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:  CHK, GE, HFC, MET, YUM

Calls Expired: LULU, WFM

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:  AIG (3/7 $0.12), ANF (3/4 $0.20), COH (3/5 $0.34), HFC (3/2 $0.50 Special Dividend), MOS (3/4 $0.25)

 

 

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For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, C, CSCO, CLF, COP, DRI, FCX, INTCJCP,  LULU, MCP, MOS,  MRO, NEM, PBR, PM, RIG,  WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)

* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.