August 18 – 22, 2014
|NEW POSITIONS/STO||NEW STO||ROLLOVERS||CALLS ASSIGNED/PUTS EXPIRED||CALLS EXPIRED/PUTS ASSIGNED||CLOSED|
|3 / 3||5||0||0 / 0||2 / 0||0|
Weekly Up to Date Performance
August 18 – 22, 2014
New purchases for the week trailed the unadjusted S&P 500 by 0.1%, but beat the adjusted index by 0.2% during a week that the market had its best performance in about 4 months.
New positions opened this week went 1.6%% higher, however the overall market was 1.7% higher on unadjusted basis and 1.4% higher on an adjusted basis.
Performance of closed positions continued to out-perform the S&P 500 performance by 1.8%. They were up 3.7% out-performing the market by 93.2%.
With really almost nothing having happened this week it turned out to be the 3rd best performing week of the year and the best in the past 4 months.
That’s generally not good news when you’re hedging your bets and most hedge funds are again looking at how to play significant catch up with the indexes, just as it had to do in 2013, although the overall climb this year has been much more subdued.
Last week was definitely one of those “left behind” kind of weeks that don’t happen very often. Given, however, how strongly the market climbed this week I was expecting to once again be left in the dust, but happily it didn’t work out that way.
What did happen was a fair number of assignments, which isn’t unusual when the market has a sharp climb higher. Fortunately, the week also saw the opportunity to develop cover on a number of positions, as well as being able to execute some rollover trades.
It was also nice to grab some more dividends, with even more expected next week.
Among those going ex-dividend next week is Holly Frontier.
It goes ex-dividend for its special dividend of $0.50 on Monday. Although shares closed at $51.26, there’s not much reason to expect that the September 20, 2014 $51 calls will be assigned early.
Those contracts will be adjusted down to $50.50 on Monday as the opening share price will be adjusted to $50.76 and then shares go ex-dividend for their regular quarterly dividend of $0.32 on August 28, 2014.
Complicated? Maybe, but if shares are above $50.50 on Wednesday at the close, because we’re dealing with a September 20 contract the chances of early assignment are reduced.
When putting it all together, the rejuvenation of cash, the option premiums and the dividends that will get deposited into the account, it was a bit of good fortune to be able to keep up with the broad market that would have been well appreciated last week, but at least this week wasn’t a duplicate.
As Friday’s trading session neared its close some of you may have noticed that I did something that I haven’t done in over a year, but may begin to do with more frequency if everything is aligned just right.
What I used to do on a fairly regular basis was to rollover contracts even if they were in the money and unlikely to expire. I did that rather than accepting assignment.
This week, with Whole Foods, came that opportunity.
The reason for rolling those shares over was related to having a fair number of positions already destined for assignment and not having very many positions scheduled for contract expiration next week.
Additionally, in this instance I wanted to grab the additional 0.8% net premium, rather than having to find another stock on Monday to take its place.
In a small way that decreases the need to find at least one replacement position at a time when there is so much uncertainty still in the air and the market is again at or right near new highs.
Given the continuing low volatility that means I’ll have greater leeway in selecting expirations for any new positions opened next week. Since the best premiums are still with the shorter term contracts and those premiums seemingly drop off of a cliff as going out much further, there won’t be the worry of being too heavily reliant on the outcomes of a single week.
Whenever there are too many positions set to expire on a single day I get a little nervous, because it doesn’t take too much to upset the apple cart and ruin some well laid plans.
Next week it’s almost like getting off to a fresh start, but with lots of money to do so and no real compelling requirement to spend, other than the desire to generate some income.
Fortunately, some of the positions going ex-dividend next week will relieve some of the need to look for other income streams and there may be some good reason to look at some very staid companies also going ex-dividend next week in order to supplement the existing dividends with some more and even some option premiums, to boot.
But that’s next week and that’s still so far away.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: CCL, WAG, WFM
Puts Closed in order to take profits: none
Calls Rolled over, taking profits, into the next weekly cycle: WFM
Calls Rolled over, taking profits, into extended weekly cycle: WAG (9/12)
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, FAST, GM, HFC, HFC
Put contracts expired: none
Put contract rolled over: none
Long term call contracts sold: none
Calls Assigned: BBY, DD, DG, DOW, EBAY, MET
Calls Expired: BX, LVS
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: CCL (8/20 $0.25), RIG (8/20 $0.75). TGT (8/18 $0.52), WAG (8/19 $0.34)
Ex-dividend Positions Next Week: HFC (8/25 $0.50 Special dividend), HFC (8/28 $0.32), LO (8/27 $0.62), SBGI (8/26 $0.16)
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, BMY, BX, C, CHK, CLF, COH, FCX, IP, JCP, LULU, LVS, MCP, MOS, NEM, PBR , PFE, RIG, TGT, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)
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