Trade summary: boozy new year

A small trade on DEO Diageo LLC. (Purveyors of fine boozy spirits world-wide)

The brick:

Details:

2 contracts DEO FEB $110/105

Current stock price $114.50 (at time of trade)

Max profit $146.83

Max loss (1000-146.83) $853.17
Days to expiry: 52

 

Projections for worthless expiry:

ROC: (return on capital) 17%

ROR: (annualized rate of return) 121%

 

Approximately 5% downside protection.

 

In the spirit of new years' celebrations with champagne, this is my festive trade of the season.

Cheers!

Stay hungry my friends!  (And thirsty... buy DEO stuff!!!)

 

 

Trading summary: I'm a blogging slacker

Catching up:

I made my $MCD position a short iron condor by adding a bear call spread on top:

And today I added spreads on YUM and XOM.  YUM has been good to me.  My short strike is lower than it's been in the past 2 years.  Should be easy to hold.

XOM however, I'm hoping oil is near it's bottom.  But it could fall more.  That said, the premiums are rich considering how little XOM has moved in response to a 45% crash in the market price.

Also shown are closing some short puts and a cover call.  Lost a bit on the CC.  I want to keep the shares and I don't want to have to roll it forever.  The premiums on this particular REIT are SUPER thin and very illiquid.  I was hoping to juice my returns, but I'm impatient and didn't want to risk losing more than $20.  ($23 including comms).

The AVO short puts worked out nicely for an annualized ROR of 18%.

Stay HUNGRY my friends.

Trading summary: driving away with the profits

Today I closed 2 bull put spreads on Magna International.

Here's the brick:

With the price of oil crashing, why would I be exiting the auto-sector?  My moves had done well, and faster than I had expected.  And to top it all off, with the energy market doing what it's doing, I need some capital to defend a position I took on 2 weeks ago, and hopefully make some choice picks when the market finds a bottom.

CLOSED: MG - Magna International
5 contracts $MG $100/98 bull-put-spread MAY
Position open: 29-oct
Position closed: 8-dec
Position open:  40 days
Maximum Premium : $245
Maximum loss: $755 (1000-245)  
Closed @ 46% capture ($120)
Yield on risked capital: 16%
Representing an annualized yield of 146%



CLOSED: MG - Magna International
5 contracts $MG $105/100 bull-put-spread  FEB
Position open: 17-sep
Position closed: 8-dec
Position open:  82 days
Maximum Premium : $345
Maximum loss: $2155  (2500-345) 
Closed @ 56% capture ($200)
Yield on risked capital: 9%
Representing an annualized yield of 42%

Stay HUNGRY my friends.

Trading Summary: crappy food, overpriced coffee, and a brokerage

Today: Closed 3 positions.  YUM Brands, Starbucks, and Interactive Brokers.

Here's the brick:

CLOSED: IBRK - Interactive Brokers
1 contract Jan $27 Puts (naked puts)
Position open:20-novPosition closed: 5-dec
Position open:  15 days
Maximum Premium : $89.61
Maximum loss: $2610.39 (2700-89.61)  (if the stock went to ZERO)
Closed @ 49% capture ($44.27)
Yield on risked capital: 1.7%
Representing an annualized yield of 40%

Full disclosure: this is my brokerage: I highly doubt they would be ZERO by January...  Entirely unlikely.  Thus the max loss is theoretical only.  And yes, for those of you who see that "Comm" item of $0.34, that's how much my commission was to trade this.  Sure beats EVERY OTHER brokerage in Canada.  This move would have cost me $11.24 ($9.99+1.25) at my old brokerage.

CLOSED: SBUX - Starbucks Coffee
5 contracts April $70/67.50 Bull put spread
Position open:31-octPosition closed: 5-dec
Position open:  36 days
Maximum Premium : $235
Maximum loss: $1015 (1250-235) 
Closed @ 64% capture ($155.40)
Yield on risked capital: 15%
Representing an annualized yield of 158%

Huge positives for Starbucks. Time to take my money, and buy a coffee.



CLOSED: YUM - Yum Brand Foods
5 contracts April $65/62.50 Bull put spread
Position open:25-aug
Position closed: 5-dec
Position open:  103 days
Maximum Premium : $265
Maximum loss: $985 (1250-265) 
Closed @ 64% capture ($169.59)
Yield on risked capital: 17%
Representing an annualized yield of 62%

Yum has recovered from it's "floor chicken" fiasco.  It's got it's mojo back, so it's time for me to exit my position and re-deploy into something else.

Stay HUNGRY my friends.

Trading summary: Cleaning up

Colgate Palmolive - A consumer staples company.

The brick:

5 contracts CL May 2015
Max profit $282.10
Max loss (2.5k-282.10) $2.2k
Days to expiry:165

Max Yield on risked capital: 13% 

Projected annualized gain for worthless expiry: 28%

This is perhaps not the best timed move, but I've had so many positions come off (and come off EARLY) so I wanted to get some more theta decay going in my account.  (Premium erosion over time)

I've been in and out of $CL a few times already in my new account, so it seemed like a good choice to get back in.

Also, I CLOSED my short puts on IPL (Inter Pipelines).  It had moved to nearly 50% max profit since YESTERDAY.  While not realistic, that represents an annualized yield of 1373%.  I was hoping for an assignment.  So I'll take my profit and try again the next down-day for oil.

In review, some readers have tweeted that my risk/reward seems crazy low for these moves.  And by the numbers, it does look that way.  However, I'm doing "defined risk" trades so I have an absolute maximum loss.  If you buy a stock or sell short puts, your losses can be potentially MUCH larger than mine.  Additionally, if I were selling short calls, or short strangles, then the losses are theoretically INFINITE.

Stay HUNGRY my friends.

Trading summary: going Looooooooooonnnng

To further account transparency for all of my 3 readers, I will start updating all of my moves to my trading account, and perhaps talk vaguely about the moves I'll do in my TFSA, RRSP, and sons' RESP.  (Think tax free, tax deferred, and education accounts for you non-kanuckistan residents)

Here's the brick:

The move: STO (sold to open) a $32 Put on IPL (Inter pipelines - An oil pipeline company).
Credit $1.15  ($115-$1.50 commission)  $113.50

NB: This put is ITM (in the money).  I am hoping to take assignment of IPL @ $32/s.

With the premiums collected that would give me a cost base on IPL of $30.88.  As the stock closed today @ $31.32, that's not too bad.  The stock was trading at $31.26 when I made my move.

If IPL goes up above $32 by December 19th, I'll walk away with my $113.50.   If this is the case, that would represent a 13% annualized yield.

Stay hungry my friends.

Trading Summary: Apples and no oranges

I added a new position of Apple today.  I was thinking of adding another because I often get the feeling I don't trade enough (don't make enough attempts), but I had second thoughts and decided to leave it at that.

The brick:

 

5 contracts AAPL (Apple Computers) April 2015
Max profit $393.09
Max loss (2.5k-393.09) $2.1k
Days to expiry: 135

Max Yield on risked capital: 19% 

Projected annualized gain for worthless expiry: 50% 

 

Why did I make this move?  I watched the algos initiate HUGE selling on apple.  It dropped very quickly so after the dust started settling I found a reasonable trade (for me) on AAPL.  The premiums jumped up a bit as a result of the bot-selling.

 

For this trade to be in danger, Apple will have to fall MORE than 16%.

I had recently closed an April Apple spread, but it's strikes were MUCH lower.  April is still a long way away so I have time to wait out any current market instabilities.

 

Stay HUNGRY my friends.