Weekend Update

If I do say so myself, the nice thing about my blog is that you really don’t have to read it very often, because I’m constantly repeating myself. Imagine being married to me. Suddenly the unlimited supply of amusing stories and anecdotes reaches a limit, as long as your memory or hearing is intact

Best of all, this still being a free society, you don’t have to read it at all, as long as you continue to pay the monthly subscription fee to have it delivered to your Kindle.

Imagine, just $0.99 a month to have it electronically delivered to your e-Book reader.

I think Amazon should adopt the old Telephone directory strategy for having an unlisted number and charge $2.50 a month to not get the blog delivered to your Kindle.

But if you have been reading on a regular basis you’d know that I’ve been bemoaning the fact that so far in 2012, I’ve been trailing the S&P 500.

Ever since I’ve been doing this dogmatic approach to covered call writing I’m not accustomed to seeing myself behind the eight ball.

TIME MagazineThe real kiss of death probably came when Barrons Magazine called the covered call strategy the only winning one for 2011.

It’s exactly the same as when TIME magazine puts something hot on the cover.

It fades and fizzles.

Or like when Sugar Momma finally got herself an iPod Mini.

The day that she gives up her Kindle and exchanges it for an iPad is the day I start shorting Apple shares with every last bit of my soul and portfolio.

But finally, this week was back to normal, though not in trading activity. I still made relatively few trades this week. Having made such few trades, some dumb ones, in hindsight, really stand out.

Like grabbing a few pennies by selling calls on all of my Research in Motion holdings on Thursday, the day before shares inexplicably go up 7%.

I say inexplicably, because the purported reason was first given that there was some sort of Samsung alliance rumor, which was then followed by the contention that the fact that RIMM didn’t offer a “profit warning” report had to be a very positive sign.

I don’t know very much about SEC rules, and by that I mean that I don’t know anything, but are they required to give profit warnings?

Anyway, it’s those unexpected and large climbs that can make covered calls a bad choice.

But I have faith that the optimism in the overall market may be misplaced.

Back to why this past week was normal in nature.

Mostly, because for the first time in 6 weeks I finally out-performed the index. But most of the reason for that was because of the reversal in the price of precious metals. Of course, it was the rise in the price of precious metals that was also solely responsible for the previous 6 weeks of underperformance.

Also more like the normal situation I’ll be needing to replace about 40% of my portfolio. In my ideal world. I’d typically have to replace between 20-40%, with the need to replace multiple positions, rather than seeing a single holding that really exploded in price.For the past month I’ve been replacing anywhere from about 4% to 60%, with an unfortunate emphasis on the extremes.

With the exception of RIMM, pretty much everything that will now need to be replaced will be starting the week off right near their assigned strike prices.

Kohls, Chesapeake Energy and Mosaic may very well be repurchased on Monday, after all, I am a creature of habit.

Have I told you that before in the form of some kind of rambling story?

I didn’t mention ProShares UltraShort Silver ETF in that group. That’s because a small portion of my holdings were assigned and I’m happy about that, as it helps to pare back the size of that position, that had grown, through a slowly creeping fashion to be much too large.

Similarly, I may once again sell puts on Green Mountain Coffee Roasters, Focus Media and MolyCorp. I may add Freeport McMoRan and iShares Silver ETF to that list, as well.

Each week I feel like I know and understand less and less, but am comforted by the fact that those who profess that they understand what’s going on are just delerious.

Among the perplexing things in the world has to be why a respected firm like Jeffries would re-iterate its opinion that GMCR was a hold, yet lower its price target to $29 from the current $51.

That’s why I’d never make a good analyst. I just didn’t intuitively understand that you would make it all up on volume.

I normally spend Friday or Saturday scouring the list of upcoming ex-dividend stocks in the coming week looking for opportunities to Double Dip on dividends and option premiums, but couldn’t really find any that appealed to me, especially since I’m focusing more and more on stocks that have weekly options available.

Whart I am considering, as part of my need to occasionally do something reckless is to either buy shares or sell puts on the ProShares VIX Short term ETF.

The last time I owned shares of that derivative of volatility was back in July 2011 or so, when it was at the same price as its current low.

WIth the VIX measure of volatility at an all time low and my belief that we’re going to be giving up some gains, the VIXY may be a good purchase right now. It will move up in price if the market falls.

Of course, its option premiums, which reflects a derivative of a derivative, is pretty enticing, despite the fact that only monthly contracts are available.

Now this part gets confusing.

The way I interpret the options prices the real premium seems to be on the put side. That means that the “smart money” is going into puts, reflecting a belief that the market itself will go up.

So I’ll choose the opposite direction and will likely buy shares and sell calls, rather than selling puts.

But just to complicate things a bit more, a similar product, the iPath VIX Short Term Futures ETN (VXX) has the same smart money going to the call side.

Since VXX has weekly options, I may be more inclined to be reckless with that, than with VIXY.

Or I’ll do neither of the above, depending on where the market opens on Monday.

Of course that caveat applies to everything that I write about in the weekend updates.

The one real downside is that it’s easy to get confused as to what you want to see happen. It’s so much easier to think unidirectionally, wanting prices to only go up.

Then when you start introducing concepts like buying short ETF’s, or selling puts, or selling calls, especially on a short ETF, well you get the idea.

In the meantime, it’s the weekend and I have to get the house back in shape as Sugar Momma returns from here periodic trip back to see her California homies.

She’ll ask what I did all week without her.

Wouldn’t it just be easier for her to have the blog delivered effortlessly to her ever-present Kindle?




Check out Recent PortfolioTransactions and
Transaction Performance 


Recent Trades Security Type Action Type
March 17, 2012 AFL Call Expired Monthly
March 17, 2012 CHK Call Assigned Weekly
March 17, 2012 CVC Call Expired Crumbs
March 17, 2012 FMCN Puts Expired Monthly
March 17, 2012 KSS Call Assigned Monthly
March 17, 2012 MCP Call Expired Weekly
March 17, 2012 MCP Put Expired Weekly
March 17, 2012 RIO Call Expired Monthly
March 17, 2012 RIMM Call Assigned Crumbs
March 17, 2012 S Call Assigned Monthly
March 17, 2012 XLE Call Assigned Weekly
March 17, 2012 ZSL Put Expired Monthly
March 17, 2012 GMCR Call Expired Crumbs
March 17, 2012 GMCR Put Expired Weekly
March 17, 2012 MS Call Assigned Weekly
March 17, 2012 ZSL Call Assigned Monthly
March 17, 2012 ZSL Call Assigned Monthly
March 16, 2012 MOS Call STO Crumbs
March 15, 2012 GMCR Call STO Crumbs
March 15, 2012 CVC Call STO Crumbs
March 15, 2012 RIMM Call STO Crumbs
March 14, 2012 CHK Call STO Weekly
March 13, 2012 MS Call STO Weekly
March 12, 2012 SLV Call STO Weekly
March 12, 2012 SLV Stock Buy
March 12, 2012 GMCR Put STO Weekly