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30Jun/130

End of an Era: Leaving London

I haven't updated the blog in a while so I thought I'd check in. Haven't been much of a market participant in the past two weeks, but I have added a few shares and closed an INTC option position for a small profit. It was mostly passive.

I've really been focusing on moving back to the states. I've been living in London for the last two and a half years, and it's all coming to an end in a week. Needless to say, I've been busy. We had a bit of a stag weekend, then all the nights out at the pub to get my last few pints in with my mates, now I'm sitting here in my flat trying to pack up! It's all a bit depressing, but it's going to be the start of a new chapter in my life. My company sent me over here on an ex-pat assignment and now I'm returning to the home office in Chicago. My time here has been incredible, indescribable really. What am I supposed to say about two amazing, decadent years overseas? There were lots of ups and downs, but mostly ups. I'm going to miss it, and in a way I don't want to go back. I've made a life out here, made friends and, in a way, put down some roots. I will always consider London to be my home away from home. I don't even consider Chicago to be my home, I only lived there for two years before moving to the UK. Before that I was kicking it outside of Detroit. I've moved around a lot in the last 10 years, so where is home? It doesn't matter.

I'll probably be a bit more vacant from the blog for the next couple weeks as I wrap up my job, pack up my things, and get settled in Chicago. I know I don't have a lot of readers, I'd probably have more if I posted more frequently, but there may be a few people out there getting some RSS feeds. I feel like I'll get back into in when I get settled, especially since my lifestyle will likely undergo a forced change. Chicago is a great city, but I feel like I've been spoiled in London. There's always something going on, always coworkers willing to go out after work, and generally less aggressive civilians. I love Chicago, I'm just afraid of reintegrating. I'm more nervous about going back than I was about coming here. I'll get over it, I don't have a choice, but it's going to be a challenge.

It's like graduating from college after four crazy years, then looking at the next phase and feeling a bit uneasy about it. In a way I've felt like a student for the last two years, except for the fact that I worked my ass off more in London than I ever did in school. I was my own boss, I made decisions for my department, I solved dilemmas without outside support, and I only checked in with my US manager a few times a month. So, in a way, it is like having been in college: my parents [management] is back at home and I only check in with them a few times a month, but otherwise they know I'm doing well in my studies [massive workload].

On the whole, the experience is positive. It's a new chapter of my life! I'll get to use the skills that I learned overseas to my job back in the US. I have a better understanding of business and execution after having been neck-deep in a challenging project. I've grown personally and professionally, so it's exciting to take that and apply it elsewhere. I have a chance to reinvent myself as well, a lot of my friends and associates haven't seen me in a long time and it will be an opportunity to improve those relationships.

More than anything I'm looking to see my family. They're waiting for me to get back, the distance hasn't been too difficult but after two years it starts to seem further away than it really is. I can't wait to do some BBQ with my brother, his wife and my beautiful niece!

Enough writing now, back to packing!

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21Jun/130

What a great buying opportunity

Quick mobile blog post: good pullback the last two days, quite a bit of panic selling but leaving a great set up to average down on my prices. Already added more PM yesterday on the drop. Looks like global markets are back in buying mode now. Can't wait to see what happens today!

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12Jun/130

INTC Covered Calls Follow Up, Market Declining Now

After two down days we're starting to get into a reasonable position on these INTC options.

As a preface, there are formulas that explain these pricing phenomena; the market makers and algorithmic traders are using them, except they've plugged them into computers. I'm not a mathematician, and I don't really make option trading decisions based on options pricing models, except when I'm using a black-scholes calculator to figure out if the market is under/overvaluing option premiums. The problem I have with using those is that implied volatility and be measured and derived in so many ways; it's IV that determines the bulk of these pricing models. What I instead choose to do is look at what the market is offering and what I'd be willing to take. I wouldn't write a call if the premium and assignment profit weren't worth it, like I did with those Ford weeklies.

Market is closed now for Wednesday June 12th. INTC closes at $24.46 per share, a pullback from $25.01 on Monday's close. My June $24 calls closed at an ask of $0.68. We're looking at a $0.22 time value premium for a week and a half before expiration. Two days ago, the time value was $0.12 per share. Now that the stock is less in-the-money, the time value premium tends to increase as the delta increases. It's still in the money, but just not as much, so delta impact has already set in on its fall from $25.01 to $24.46, and now delta is greatly reduced as it gets closer to both the strike price. The delta on the June $24 is 0.6841, lower than Monday. [I'm sorry, I'm looking through my notes and I definitely didn't record the delta on Monday, that's crucial for showing the comparison, but trust me, when INTC was $25.01, the delta on that call was higher than 0.80.]

The frustrating part for the option writer that really wants to hold the stock is that the intrinsic option value is now equal to his sell price, presenting an opportunity to get out at a break even, but there's also $0.22 of time value! This option writer is still in the red! Unless the stock pulls back to $24 in the next seven trading days I either have to roll or say goodbye to the stock.

I'm still counting on further pullbacks. I'm loving the current devaluation. It makes my portfolio look kind of sad, but it also gives me lower entry points.

Can't wait to see what INTC does next week

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10Jun/130

How Intraday Price Action Affected My Option Rolling Strategy

Chicago in Summer

Hi again everyone, the market is now closed and I wanted to look at how today's price action on Intel (INTC) stock affected my options premium. It closed at $25.01, up $0.42. This is enough to skew delta out of our favor. ITM options have higher deltas the closer they are to expiration, which means the ones I'm holding are rising in price faster than the ones I'd like to roll out to. Let's look at three points of interest, the price to buy my call back (A), the price at which I can sell Sept calls (B, C):

A. The ask of my June $24 call closed at $84 on Friday, the ask at close today is $113, a $29 increase.
B. The bid of the Sept $24 call closed at $145 on Friday, the bid at close today is $169, a $24 increase.
C. The bid of the Sept $25 call closed at $95 on Friday, the bid at close today is $113, an $18 increase.

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9Jun/130

Review of Current Short Call Positions Going Into June 2013 Expiration

Garbage Pail Kids Zack Snack

Hi everyone! Another relaxing weekend behind us and a full week of trading ahead of us! We've got two weeks of trading until the June options expiration cycle, and I've got a couple positions that could play out either way. While I do regularly watch all my positions, I tend not to mess with most of my short calls unless I can buy them back for a decent gain. This month I have two in-the-money short calls that I need to start planning for. [Continue reading]

9Jun/130

Dividend Portfolio Mid Year Review

Canal

Hi everyone, it's the first week of June so I thought it'd be a good time to see where I stand with my dividend portfolio. In prior articles I talk mostly about my quest to build positions in the S&P Dividend Aristocrats, but some of my dividend holdings are not on that list, and some will probably never be on that list (I have a few positions deep in the red that are best left for dead, but I'm not selling at the moment, I'm hopeful of a comeback). [continue reading]

9Jun/130

Added to my VF Corp (VFC) Position on Wednesday

Just a quick update to the dividend aristocrats portfolio: added another 10 shares of VFC for an additional $8.70 quarterly income. Small, yes, but a valuable addition nonetheless. I was hesitant to buy in since the price had jumped up so much, but I had idle cash and I felt it more better that it was working for me. After all, income is the goal. It went ex-div on Thursday. Have a great weekend all.

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6Jun/130

Added Philip Morris International to Dividend Portfolio

Just a quick update, I took an opportunity on a small pullback today to add Philip Morris International (PM) to the dividend portfolio. If you don't know, PM was a spinoff of Altria (MO) a few years ago, they've spun off their international arm. It's not officially part of the S&P Dividend Aristocrats, and neither is Altria, but I consider it to be a strong enough candidate to hang with the other aristocrats in my portfolio. 

A lot of analysts believe this company has a lot more growth potential than Altria due to the decline of smoking in the USA. I agree with them, and while there are some obstacles (like the bland packaging on cigarettes in Australia and general public health initiatives in developing countries), I still feel that the growth opportunities are huge.

Having lived in the UK for over two years now I can say with confidence that the most popular brand of cigarette here is Marlboro, and smoking still remains quite popular with minimal public outcry. Sure the packages have pictures of lung tumors, but that doesn't seem to be much of a deterrent. Smoking in the US is on a major decline, but in the UK and other parts of Europe it still seems to be en vogue. This is why I feel PM will do well.

They are paying a 3.7% dividend, and they haven't announced their latest one yet but I'm anticipating an announcement next week with an ex-div around June 25. Stay tuned

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4Jun/130

Play The The Ford Weekly Options For A Mild Ride

Also posted on Seeking Alpha Instablog

I do say mild in the title with great enthusiasm, not sarcasm. Of course the recent action in Ford stock has been fun to say the least. I'm usually not a serial put-call writer in practice, I do like to dabble a bit when I can.

I recently came into some cash when my short Altria (MO) calls got exercised. I know, I was sad, but I have loads of it in another account anyways, so I was overweight. Flashback to mid February, I was already up a couple points on my holding so I decided to write some $34 calls for a bit of cash to roll into my dividend favorites. I didn't anticipate the great run on the markets and the stock had gone to $37 by May 17 expiration, so at that point it was too deep to roll. I couldn't use the cash to write more Altria puts since the only $34 worth selling didn't expire until next January. So, fresh with $3400 cash, I decided to get back into old faithful Ford. [continue reading]

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3Jun/130

Followup on Ford options play and dividends for this week

Ford closed at $15.89 today, recovering from a bit of a spill, so I closed out my options position in the last minute of trading for a small gain. I tried to close it out in the first minutes of trading, as it spiked into $16.10 territory, but I set my limit too low because I wasn't in a position to watch intently at the moment, so I set it and forget it. I was greedy though, I could have settled for less and it still would have been more than I made on the close. Oh well, a profit is a profit.

To summarize, I was assigned 200 shares of Ford (F) at $15.00 on the May 24th expiration, I sold two calls before the close in anticipation of assignment. Those calls got exercised on the May 31st expiration; knowing this was going to happen, I turned around and sold the $15.50 puts for June 7 expiry. I intended to hold these into expiration and see what happens, perhaps repeating the same strategy for the following week. In the end I decided I should employ my $3100 cash into something else...back to building dividend shares.

On my radar tomorrow: Pepsi (PEP), Genuine Parts Co (GPC), Kimberly-Clark (KMB) and Becton Dickenson (BDX). These all go ex-div on Wednesday. In my existing portfolio VFC Corp (VFC) goes ex-div on Thursday, but it's shot up pretty far from where I originally bought it, so I'm going to leave that. ADP is going ex-div next week but is in the same situation, moved too far from my entry point and I don't want to average up.

I also need to look at building up my positions with less than 100 shares, I need more positions eligible for covered call writing. Unfortunately positions like VFC, at about $185 per share, are going to require a lot more cash to get there, especially with the recent run up in price. It becomes a balancing act: add new positions while also adding to existing positions. At some point I'll have to decide on a more humble basket of stocks with less frequent buying intervals, I don't have enough free cash flow to keep supporting this buying behavior. For now, I'm not there yet, but I'll probably reach saturation around September or October, depending how the summer turns out.

Or, I could sit on the cash and wait to see what Ford does on Friday, but I'm kind of over that action. It's been a good two weeks, I made a nice little sum. I'm looking at other weekly options strategies like NVDA (NVDA). I suppose the conclusion of this article is that I cannot make up my mind, and that's OK. I'll let you know what happens next.

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