Sorry I haven't written in a bit, but things are pretty busy for me these days. Also, the market has been less than exciting lately, with things going pretty much sideways for me for the last few weeks (as I expected). With my trading strategy, I need the market to pick a direction (up OR down) and stick with it, and that hasn't been the case lately.
YTD, I am up 2.9%, so I have slipped a little bit during the last few weeks, but still at my goal pace of 1% per month in gains (minimum, of course). The market will likely continue to trade sideways for a couple of more months and then correct over the summer as it normally does (last year being the recent exception, due the massive correction leading into the summer).
Right now, I hold COS.UN, X, ENF.UN, PMZ.UN, HSE, HED, MFC, and BIN. I never seem to make money on the oil stocks like COS.UN and HSE but I continue to buy them when the graphs tell me to. With oil trading in the $70 to $82 range for the last many months, I expect a bit of a pullback from where it is now, and the HED indicates that may just happen.
Next Monday I will look to buy Aecon (ARE) on an uptick, as the lines just crossed on the graph.
In an effort to avoid some of the false buys that I encounter with my method (the line crosses upwards, then turns around downward again), I am going to start waiting until the SECOND day that a stock is in buy territory. I will miss a little bit of the gain but if the stock continues to go up, I will still enjoy most of the gain. If the stock turns around on the second day, then I will not get in at all. Some users of this method wait until the unit price is 3% above the 40-day moving average, but watching for two consecutive days in buy territory is quicker and easier for me.
Have a good week everyone (if anyone is still reading this, that is).
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im still here bro
ReplyDeletelast 2 weeks my stocks have not done well..
losing on 3 of 4 stocks..
I'm still here as well.
ReplyDeleteI use a covered call option strategy in a sideways market. I have attempted it a scond time now with BCE.
Read below about my trade:
Date: Wed, 24 Mar 2010 12:24:18 -0400
Hi All,
I have decided that this week is a good time to sell another covered call option on BCE.
From my previous experience(see below), I just sold a covered call option for 0.90 per share($360) this time instead of 0.70 previously($280). The extra 0.20 should cover all my trading costs($79). Now that March 15th has passed, I will collect a quarter's dividend for BCE on April 15th ($174).
If all works according to plan, I should net more that 17% in less than 5 months this time around. If the option expires and does not get called away from me, I will repeat the process at the end of April. This will create the effect of collect two quarters or six months worth of dividends every month. Or it is like having three times more stock without the capital outlay.
If the stock gets called away then I will have made a 28% or more return on BCE for the year. I can repurchase my stock back when it falls or buy different stock that have bigger potential gains. This is now getting easier to do as I now know what my total costs are (read about my first covered call option trade below).
Recap:
I bought 400 shares of BCE @ 26.55 plus 9.99 trade fee for a total of 10629.99 / 400 = 26.57 cost per share. (Dec 14)
I will collected $174 in dividends for one quarter (March).
I sold 4 call options (each call option represents 100 shares) @ 0.90 * 400 =$360 with a strike price of $30.00 and April. 17th expiry date.
$360 - 14.99 trade fee = $345.01 net to my account which is mine to keep no matter what the outcome.
If my call option is exercised against me on April 17th, I have to sell at $30.00 * 400 = 12,000- (9.99 + 45.00 trade fee)= 11,945.01
11,945.01(sold price) - 10,629.99(capital purchase price) = $1,315.02 profit on shares
1,315.02 (profit) + 345.01 (call option sold) + $174 (dividend) = 1,834.03 total net profit
1,834.03 (net profit) / 10,629.99(capital investment) * 100 (percentage) = 17.25 % (5 month return Dec- April)
11.29% (8 months) + 17.25% (5 months) = 28.54% (13 month return)
If I had not done this my return would only be the dividend which is 6% ($494) a year plus the current price minus my intial price 30.74 - 25.47= 5.27.
5.27 (profit) * 400(shares) = 2108 + 494(dividend) = 2602 net profit
2,602 / 10,197.99 = 25.5% (13 month return)
The difference between doing a covered call option and not doing a covered call option is only 3% but if you consider that a 5 year GIC is only 2% or that mutual funds charge a 3% management fee then you can view this as paying yourself the 3% management fee for actively managing it yourself. An extra 3% compounded over 15 years on each and every stock you trade will be tens of thousands of dollars.
In my case the extra 3% covers my interest cost for the loan I borrowed to make the investment. Some financial advisors tell clients to borrow money to invest in mutual funds which means the first 6% return will go towards covering management fees and interest costs. This will cost you 6% compounded over 15 years could be hundreds of thousands of your hard earnings.
Happy Trading to all,
Good to see at least a couple of people are still here, and seeing the same things that I am. I like the way oil has looked the last couple of days but it looks to be at the top of its range (unless there is a breakout, which some are calling for).
ReplyDeleteAppreciate the news on your covered call BP but I can't do it myself as I am not guaranteed to continue to hold a stock once I buy it. If I bought a stock and sold the call and the graphs said to sell the stock in the next few days I would have to do so and also have to deal with the option. Probably a smart way to go (many people do covered calls), but not for me right now. MJ