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Posted by Martin July 24, 2017
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Costco or Amazon? Costco Is Beating Amazon’s Prices


 

This next fact might shock you: In 2016, Amazon accounted for more than 40% of U.S. online retail sales. To be sure, Amazon (AMZN) is changing the game for retailers around the world, but isn’t taking over all of retail.

Just ask Costco (COST).

In the video excerpt above, from a recent institutional call on Best Idea Long Costco, Hedgeye Consumer Staples analyst Shayne Laidlaw explains why the $65 billion discount retailer is actually beating Amazon on price.

In a Hedgeye survey of 2,269 individuals, about 25% of respondents (523 for this particular question) had both an Amazon Prime subscription and a Costco membership. Of that 25%, about 63% said their “primary reason for shopping at Costco” was the “price to value,” selected over options such as “the experience,” “convenience” and “product selection.”

BOTTOM LINE: Amazon is absolutely disrupting the world of retail. But Costco is still thriving in spite of all the hype.






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Posted by Martin July 18, 2017
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Amazon (AMZN) earnings play #2


In February 2017 I have opened a second earnings play to my previous earnings trade which I haven’t reported here in my blog.

The trade also didn’t work as planned so I rolled it into January 2018 hoping the stock would stay within the boundaries of my Iron Condor. It didn’t.
 

ORIGINAL TRADE: February 2, 2017
 

Originally I opened an Iron Butterfly on Amazon (AMZN as an earnings play with the following strikes:
 

BTO 1 AMZN Feb3 885.00 call
STO 1 AMZN Feb3 845.00 call
STO 1 AMZN Feb3 845.00 put
BTO 1 AMZN Feb3 805.00 put

@ 31.40 credit limit
 

The stock however collapsed after reporting and I had no more time to give to the stock to go back up so I could close for a profit.

I opened the trade on February 2nd, the company reported earnings on February 2nd after the market close, and the expiration was on February 3rd. So I had to roll.
 

UPDATE: February 6, 2017
 

At expiration, on February 3rd, I let the call side expire worthless and I rolled puts as follows:

 

BTC 1 AMZN Feb3 845.00 put
STC 1 AMZN Feb3 805.00 put
BTO 1 AMZN Jan19 790.00 put
STO 1 AMZN Jan19 850.00 put

@ 1.37 debit limit
 

As it was a debit trade, on February 6th I added a call side to the trade:
 

BTO 1 AMZN Jan19 1080.00 call
STO 1 AMZN Jan19 1020.00 call

@ 8.17 credit limit
 

This made the entire roll a profitable roll again. See the overall table below.

 
UPDATE: July 18, 2017
 

The above roll was successful and the stock price was hoovering above 850.00 strike price for a long time, until today. Later Amazon started its strong rally and haven’t stopped since then except a small sell off in June.

Today, as the stock reach 1025.00 a share, I decided to roll again. The reason for rolling was that if the stock continues higher, it would be difficult to roll the calls. So I wanted to roll earlier rather than later.

Remember, here we are trading spreads – Iron Condor – and these are difficult to manage. Once the spread is fully in the money, it may be close to impossible to roll for a credit unlike strangles.
 

And here is the roll again in two steps:

 

STC 1 AMZN Jan19 1080.00 call
BTC 1 AMZN Jan19 1020.00 call
BTO 1 AMZN Jan19 1160.00 call
STO 1 AMZN Jan19 1100.00 call

@ 10.26 debit limit
 

After I rolled my calls, I now rolled the puts side higher to collect enough credit to offset the debit on the call side trade:

 

STC 1 AMZN Jan19 790.00 put
BTC 1 AMZN Jan19 850.00 put
BTO 1 AMZN Jan19 1020.00 put
STO 1 AMZN Jan19 960.00 put

@ 17.60 credit limit
 

The resulting trade is now $730 credit. Below see the overall trade results:
 

Original trade: $3,140.00
February 3rd puts adjustment: -$137.00
February 6th calls addition: $817.00
July 18th calls adjustment: -$1,026.00
July 18th puts adjustment: $1,760.00
TOTAL TRADE BALANCE: $4,554.00

 

Let’s see if the trade can stay positive by January and we will not need to roll again.
 






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Posted by Martin July 12, 2017
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New STX Jul28 Iron Condor (ROTH IRA)


UPDATE: July 12, 2017
 

Great! I just found that STX will be reporting on July 25th instead of August 2nd as was indicated in my broker’s platform. So, now this trade is a total different story as I will now be holding through earnings and I could get busted should the stock move violently up or down.

 

ORIGINAL TRADE: July 10, 2017
 

STX is reporting earnings on 08/02 and I decided to open a trade which should end before earnings, so this trade will end before the report and I will not be holding it through the earnings. Well, at least this is the plan and I hope it will all go according to the plan.
 

For tomorrow morning, I am placing the following trade:

 
BTO 1 STX Jul28 44.00 call
STO 1 STX Jul28 42.00 call
STO 1 STX Jul28 35.00 put
BTO 1 STX Jul28 33.00 put

 

@ 0.26 credit limit
 

Below see the picture of the trade:
 

STX Iron Condor
 

Why July 28 expiration?
 

  • As I mentioned above, the company reports earnings on August 2nd and I want this trade to hopefully end before expiration. Also I selected 17 days to expiration to be able to go further away from the money and collect a decent credit.
     

How did I choose the short strikes?
 

  • When I trade conservative trades I use expected move. TOS shows you the expected move for every expiration (and if your platform doesn’t, it can be calculated) in the upper right corner of each option chain expiration. For July 28th the expected move is +/- $2.753 dollars each direction. That means that the stock may fall by $2.753 or go up by $2.753 by July 28th. It is not a 100% guarantee, but there is a chance that it may happen. Most of the time the stock stays within this range, so if you choose your strikes out of this range, you would be playing a safer bet.
  • In this trade, I rounded the expected move to $3 dollars and then subtracted from the current price of $38.39 a share to get the short put strike and added it to the recent price to get the call short strike.

 

Why $2 spread width?
 

  • I chose this arbitrarily as I wanted to limit my cash at risk to $200 dollars only, therefore I choose $2 dollars wide spread.

 
How will I be managing this trade?
 

  • Since there is a chance that tomorrow morning this trade opens for only 0.26 credit (the range for the trade was 0.17 to 0.34 credit but I moved the slider to the center which is what the trade is likely to get executed) I plan on not to be buying those legs back and let them expire. If I see the stock moving too close to one or the other side, I may choose to close the opposite short leg for 0.02 debit so I can roll the endangered side higher or convert it.
     
     





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Posted by Martin July 10, 2017
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AMZN earnings play


UPDATE: July 10, 2017
 

As I wrote below, my last roll of AMZN was a mistake. The stock stopped falling and started rallying again. The dip was short lived but the good thing is that it has occurred. Now we had a consolidation and I think the stock will rally up again and may exceed $1,000 dollar mark.
 

This wasn’t a very good situation for my call spread. So I decided to adjust this trade again:
 

First, I closed the put side:
 

STC 1 AMZN Jul21 910 put
BTC 1 AMZN Jul21 930 put

@ 0.74 debit
 

Second, I rolled the call spread into a new, higher put spread with November expiration:
 

STC 1 AMZN Jul21 1000 call
BTC 1 AMZN Jul21 980 call
STO 1 AMZN Nov17 990 put
BTO 1 AMZN Nov17 970 put

@ 1.07 debit
 

Third, I opened a new call spread to offset the cost of the call/put conversion above:
 

STO 1 AMZN Nov17 1220 call
BTO 1 AMZN Nov17 1240 call

@ 1.09 credit
 

Why November expiration?

  • I wanted to gain as much time value as possible to sell and offset the roll cost and also to give the stock time to move higher as the new put spread is at the money and at the time of opening it was actually in the money.

 
Why 990/970 put spread?

  • Again, selling at the money puts would provide enough premium to offset the cost as much as possible. Adjusting spreads is a horrible proposition and usually not a very successful strategy. So, it is about finding a feasible balance between the cost you want to pay to roll the spread and find the opposite side to offset the cost and still stay safe and in a credit trade overall.

 
Why 1220/1240 call strikes?

  • Here I used expected move (which was my mistake when rolling my trade 7 days ago). At the time of rolling the trade the expected move for November expiration was 121 dollars each direction. Adding the expected move to the current stock price gave me a probably trading range:
     

$990 stock price at the time of the trade + $121 expected move = $1,111 upper range of the stock.

 

To stay above that range I selected $1,220 short strike which is another $109 dollars higher than the expected trading range for November expiration. This gives me more room for the stock to rally and hopefully stay below my short call strike.
 
 

UPDATE: July 03, 2017
 

Amazon continues giving me a hard time trading it. It is a beast stock! After a strong rally we saw some retreat and serious selling recently when investors feared tech stocks valuation and thought the stocks are too expensive.

 
The chart below shows what AMZN did for the last few weeks:
 

AMZN
 

This selling got so close to my 940/920 put spread at some point that I decided to roll the trade down:
 

STC 1 AMZN Jul21 920 put
BTC 1 AMZN Jul21 940 put
STO 1 AMZN Jul21 930 put
BTO 1 AMZN Jul21 910 put

@ 1.33 debit
 

Since this roll was a debit trade, I decided to open a new call spread and opened the following trade to offset the debit roll:

 
STO 1 AMZN Jul21 980 call
BTO 1 AMZN Jul21 1000 call

@ 4.99 credit
 

I expected the stock to continue sliding down or staying sideways and consolidating for a bit longer. Soon I realized that it was a mistake.
 

 






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Posted by Martin July 09, 2017
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June 2017 options income


Another month is behind us and it is time to write another report about trading options for income.

I am excited that I found option trading as a good income tool and addition to my dividend investing. But this tool must be used wisely and every trader must learn how to trade options, how options can make him money or how a trader can lose money. Once you know it, you can build a strategy and a plan which will help you make money and avoid losses.

It took me some time to learn it. And I still do learn. But this time it is not mechanics of options trading, but I am learning how to use my money in account effectively and avoid being caught in a loss and a margin call.

And lately, my account got dangerously low on available buying power due to a few mistakes I made last year. And those mistakes are still hunting me even today.
 

So what is it?
 

A biggest mistake I made (and I have seen many novice traders do) is over trading.

It is so tempting and easy to invest more when your trades go your way and you see your buying power growing with it.

One day you have $5,000 dollars available to invest, the next day you suddenly see $10,000 dollars available. How tempting it is to take a few more trades!

I created calculations in my spreadsheet to be my watch dog but I made a mistake in calculating how many trades I can take. And I opened too many trades and I am still having trouble to manage them. Not that I am, losing money, but anytime the trade has a hiccup, my buying power dangerously shrinks and that makes me very uncomfortable.

So, I decided to change my trading strategy for the rest of this year. I will write about it below at the end of this post.
 

My plan for June 2017 was to make $2,103.83 dollars of income trading options.

Since I already changed our income strategy, we no longer pursue income trading options for the rest of this year. And in June our trading was driven by this new goal.

That’s why this month we haven’t reached this goal. We received $1,293.42 dollars of option income only.
 

However, I am perfectly fine with the results. Honestly, I haven’t expected them at all.
 

 · Options Trading Strategy

 

Over time since I learned trading options I went from trading spreads, single naked puts, later added naked calls and landed on trading strangles. Many people are afraid trading strangles. They do not know how to protect themselves when having naked calls trades. I was afraid too until I found out that it is not as dangerous as others say.

I am not saying that there is no risk, but if you know how to handle the risk, you will be able to navigate through strangles with no fear.

Over time I developed my own rules and strategy. You can review it in this section.
 


 


 

 


 

 

 · Options Trading Results

 

June 2017 was a very bumpy month for our company. At some point the value of our account skyrocketed (the net-liq almost reached $27,000 dollars) just to lose it all the last few days before the month end. The loss was so deep that our net-liq dropped down to $22,000 dollars and our buying power shrank down to $200 dollars!

That was so dangerous and a game changer.

I knew we were over trading our account and I was not able to force, discipline myself, as our company trader, to follow the given rules of how many trades we can have open at a time.

This was yet another warning from the market to stop playing this hazardous game and follow the rules!
 

Nevertheless, our trading in June 2017 finished that bad given how dangerously bad our account looked at one point during the tech stocks sell off. We made $1,293.42 dollars which was 5.58% monthly revenue on invested capital (ROC).

Our average monthly revenue dropped to 7.87% from last month’s 9.45% ROC.

However, we increased our exposure in the market by adding more trades (we invested approx. 8.07% more of available cash this month) and our equity grew by 2.76%.

This had negative impact on our net-liq as the net liquidation value actually dropped by 3.90%.
 

Last month I wrote about a few trades ending soon. These were mostly in tech stocks. One of the largest position was in Amazon (AMZN). Thanks to the sell off at the end of the month I adjusted the trade. Later it seemed to be a mistake. If I waited, I would have been probably OK. Now, I adjusted the trade and if the stock starts rallying again, the trade I was looking forward to close in July may not close and I will be forced to drag it for another month or more.

But that is a nature of trading. We do not know the future and we sometimes react based on the current situation and market moves. Not always this is a correct approach. You should wait patiently for the development and accordingly to your plan.

 

Below you can see all data and progress in our trading account:
 

Month-to-moth trading results

Trading results
 

(The red dots on the chart indicate income estimate, blue bars actual earnings.)
 

In June 2017 we made: 18 trades
Total trades in 2017: 227 trades
June 2017 options trading income: $1,293.42 (37.75%)
2017 portfolio Net-Liq (net)*: $3,832.19 (-1.62%)
2017 portfolio Net-Liq (gross)*: $23,165.26 (-3.90%)
2017 portfolio Cash Value (net)*: $34,461.19 (8.85%)
2017 portfolio Cash Value (gross)*: $53,794.26 (3.71%)
2017 portfolio Equity (net)*: $38,336.19 (6.75%)
2017 portfolio Equity (gross)*: $57,669.26 (2.76%)
2017 Liability/Debt: $19,233.07 (-4.83%)
2017 overall trading account result: 16.11%

* The numbers marked as “net” and “gross” are results with loan (liability) included (gross) or excluded (net).
 

 

 

We are presenting you our month-to-month business performance review:

 

In June we traded only a few trades, mostly roll overs of trades which didn’t go well.

I still struggle finding the best way to post the open trades and write about them in some meaningful way, so it will be easy to follow for you, our readers.

If you have an idea or recommendation on how you want to see our trades, please let us know what should we post and how should we present our trades to you.
 

This month, I will try to present all our open trades to you in the spreadsheet below, so if you follow our trades either in our Facebook group or via our emails, you can be comparing what trades we have and what trades we either opened or closed every month.
 

Here is the spreadsheet for June 2017:
 

Trade Summary 07-2017
(The image shows open trades through June 2017, if you wish to see up to date open trades, click on the image or here.)
 
 

The main reason behind our net liquidation value stagnation or even drop was too many open bad trades. We are still rolling those trades and manage them as I hope to finish them as winners one day. But they consume and block our buying power.
 

Some traders will tell you that such strategy of defending bad trades is not worth it and that they would rather close a trade for a loss and redeploy their money elsewhere.

Well, I was there myself. I have done that. In 2015 I did exactly that. I was closing bad trades and wanted to redeploy my money elsewhere.

I finished doing this piling one losing trade on another, collecting losses, and wiping my account out. I lost $28,000 dollars doing this.
 

So, I am not convinced about this strategy and my plan is defending the trade as much as possible no matter what others say or think about what this strategy would do to my AR%, net-liq, revenue %% or whatever else. Once a trade becomes a losing trade, I apply repair strategies and I do not care whether my AR% is 120% or 0.0000001%. I am repairing the trade. I am no longer expecting the trade to make money for me. I just want out for break even or original credit. Period.
 

Below are my comments about our existing open trades:
 


Amazon (AMZN) is a bitch! It keeps hunting me. I opened this earnings play in February 2017 and I am still in it unable to finish it. I traded Amazon in the past for a client on his account and I made tons of money. But back then, Amazon was the exact same bitch as today.

I collected great credit trading this stock, but it was not an easy money. Amazon will not give the premiums for free, it will sell its skin dearly.

As our trade in Amazon neared to expiration a tech stock sell off sent the price so low that our put spreads became ATM and at some point even ITM. What looked like a no brainer trade was suddenly a nightmare.

So, I adjusted the trade. I rolled puts down and opened a new call spread creating a new Iron Condor (the trade hasn’t been reported in the review below yet).

Now, this bitch is rallying again and it seems the call spread will continue hunting me again.

 
Here is the trade review:

 
AMZN earnings play – TRADE OPEN
 


In June we only closed a TECK trade and we still sit on the rolls or new trades from previous month. No new trades were opened.

 
Here are the trade reviews:

 
TECK strangle trade – TRADE OPEN
TECK strangle trade #2 – TRADE OPEN
 

We also have trades against STX, X, ESV, BMY, WYNN,LULU, and MNK which I haven’t reported regularly in this blog and I plan on doing so later as these trades end or I open new ones.

 

 · Our New Options Trading objectives

 

As I mentioned above, I decided to change the strategy of our options trading. To be exact we are not changing the strategy, it still is the same, but our objectives or goals we want to achieve are now different.

Since we have so many opened trades in relation to our account and any serious sell off can dangerously damage our account and liquidate our trading (and eventually put my dream of trading for a living to an end), I decided not to focus on income for the rest of the year, but to raise cash available for trading.
 

This means, that for the rest of the year we will:
 

  1. We will not open any new trade.
  2. We will only maintain existing trades – roll, adjust, convert.
  3. We will close existing trades only.

 

The goal is to close as many trades as possible and raise buying power and eventually net-liq to match our cash value and equity value.

 

 · Options Trading July 2017 outlook

 

I expect the stock market to be volatile in July. We still may see some pressure when bears would try to overcome the market but I think they will not succeed and that the US macro data would steamroll them back to defeat.

The recent selling and 5.3% correction of QQQ will most likely stay as is – the correction and not a beginning of a new trend. We still may see some pressure though.
 

But if we believe that the US economy is in fact accelerating it is logical that we want to be on the long side and not bears. The recent good job numbers (amid almost a full employment) indicates that there is still plenty of room for growth and that growth is picking up.

In a few years ago we were complaining about Obama administration changing the rules on counting employment rate excluding people who stop looking for jobs. These people are now coming back to the labor pool and that would push the labor numbers higher even more. And you can see it all over the place that companies are hiring and in fact struggling to find workers.
 

So why all are concerned and the consensus is that the stocks are expensive and due for a catastrophic bear market, I believe this is just a dip you want to buy.

 
What do you expect from the stock market in July or the following months? What do you think: Is the US economy accelerating or decelerating?
 

Just look at recent data on durable goods, capital expenditures and corporate profits. Here are the key charts:

 
 


 
 






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Employee Wellness- a strategic business imperative

Employee Wellness- a strategic business imperative

Employee Wellness- a strategic business imperative

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Employees are the most prized possession and valued assets for an organization. An effective and dynamic workforce drives the organization towards organizational success and well-being. Firms have realized the crucial role that human capital plays to further the mission and vision of the company. Human capital can be in the form of mental capabilities or labor as well. Both entail employees being healthy, mentally and physically. Statistical evidence shows that undesired levels of stress, obesity and various factors that pose a potential threat to an employee’s health breed unproductivity and ultimately incur unwanted healthcare costs and absenteeism due to health issues. Which is why one-way companies seeking to keep their employees engaged and happier is offering vacations, to help them get a break from their hectic schedule.

In order to formulate goal-oriented strategies, create a plan for your business, inculcate innovation and creativity, it is essential that employee health is managed by establishing a culture that is conducive to their growth. For this very purpose, workplace wellness programs are formulated, specifically known as ‘Wellness and Productivity Management’. These strategies can help firms of all sizes generate positive statistics regarding employee productivity. WPM is a comprehensive solution that aims to maximize productivity and derive higher profits by effectively managing their workforce. Employee well-being can be assessed using unique health risk assessment (HRA) tools which also impacts their engagement at the workplace.

 

 · Let the numbers speak for itself

 

  • 40% of all workers feel intense work pressure, causing stress-related anxiety and depression according to National Institute for Occupational Safety and Health (NIOSH).

 

  • Healthcare spending was accounted to be $2.4 trillion or $7900 per capita in 2007 which was 17% of the U.S GDP. An estimate of U.S. healthcare spending reveals that it will escalate to $4.3 trillion in 2017, which will account for 20% of the GDP.

 

  • 45% of the U.S. population i.e more than 133 million Americans have at least one chronic condition

 

 

 · Call-to-Action

 

75% of all high-performing companies keep track of the quota of expenditure spent on the employee’s health and wellness and using that data formulates effective risk management strategies. These companies have realized over a span of time that employee health and well-being is of utmost importance. Fostering an environment conducive to physical activity or constant boosts of energy in any form is one of the ways of managing the health of your employees.

 

 · What defines a good wellness program?

 

The best way to go around solving a dilemma is by precisely identifying the problem statement. So is the case here

  • Certain employee engagement surveys are drafted to measure the level of employee engagement and the factors that may be contributing towards employee disengagement. Making the upper level management aware of the situation under-hand can be the first step toward problem solving.

 

  • Employees at a high risk for depression, anxiety and enervating stress need to be identified, while at the same time keeping their health condition confidential. This builds trust between the employee and the employer as the employees feel they are being cared for and their health problems addressed.  The stress could be due to piling debt, which the company can help them get rid of via loan repayment plans. This in turn reduces absenteeism and enhances productivity

 

  • Developing the workplace culture in a way that promotes greater physical and mental well-being and backing it by incentives is the way to go. Mental health professionals can be hired and retained who will actively seek to arrange workshops and other team-building activities that will help the employees blend into one unit. This will empower them by eradicating feelings of hesitation, seclusion, and frustration. Not only that, it will undoubtedly boost employee morale and productivity.

 

Hence, it can be concluded that the best way to increase employee engagement and productivity and curb absenteeism and turnover, is to implementa wellness program. This works as a cost-effective strategy for the welfare of your employee and the company as a whole.






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Posted by Martin July 03, 2017
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TECK strangle trade


UPDATE: July 03, 2017 (TRADE CLOSED)
 

We closed our put side July 14th 16.00 puts for 0.08 debit.

This closes the trade for a total profit of 0.70 or $70 premium.

This represents the gain of 4.24% for the trade in 42 days or 36.87% annualized profit.

 

UPDATE: June 16, 2017
 

Our July14 TECK 20.00 calls closed for 0.05 debit. Still holding the 16.00 puts.

I am waiting a bit longer (about a week until expiration) and then attempt to roll the puts unless the stock recovers).
 

UPDATE: June 12, 2017
 

 






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Posted by Martin July 02, 2017
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June 2017 dividend income


I was so busy in June working hard towards my financial independence that I almost forgot that the month is over again.

I am very tired these days because I took a second, part time job to make a few more bucks and that income goes towards my financial independence.
 

With the additional money I plan on achieving the following goals:
 

1) pay off all my debt
2) raise emergency savings
3) save money in my trading account to create a stream of income
 

In this post I would like to again report my dividend and options income for June 2017.
 

This month, we received $87.90 dollars in dividends. It was $1.58 dollars less than in the previous month.

Our options income exceeded all previous months of this year as we reached $192.00 dollars of received premiums. It was 5.82% on invested capital (ROC).
 

Our overall, average, annual, options income is 3.24% which is a great achievement considering that in our ROTH IRA we can only trade cash secured trades or spreads.
 

Although our month-to-month dividend income was less than the record month of May, I am happy to see that our annual dividend income increased again to $1,089.88 from previous month of $1,083.88 (0.55% increase MoM).

 

 · ROTH IRA investing/trading strategy

 

If you are interested, here you can review our investing & trading strategy used in our ROTH IRA account.

 

 

 · ROTH IRA dividend income

 

In June 2017 we have received $87.90 in dividends. All dividends were reinvested back to the companies which generated them using DRIP program.

We use DRIP as long as our dividend income is small to use direct reinvesting by manual stock selection. Once our dividend income reaches at least $1,000 dollars or around this number, we will cancel our DRIP and start using selective reinvesting.

Selective reinvesting means that we will pick our own other stocks into which the dividends will be reinvested. It will no longer be an automated DRIP program buying the same stocks which produced the dividend.

But it still is a long way to go.

 
Here are some numbers:
 
Dividend Income = $87.90 (account value = $22,734.57 0.08%)
The account is up 9.42% for the year.

 

 
Monthly dividend Income:

 

 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · ROTH IRA options income

 

Our options income reached $192.00 dollars of received premiums.

We trade conservative trades to create income in this account which can be later used to buy more dividend growth stocks.

After our options income reaches $2,000 dollars, we will use 50% of the amount to buy dividend growth stock. Until then, we will just reinvest the options income back into options trading.

This is a great deal as I personally struggle depositing more money to our ROTH IRA account and dividends along with premiums help generating a good deal of money.

 
Here are the numbers I am looking at:
 

$50 monthly deposits (contributions)
$107 monthly average options income
$88 monthly average dividend income
$245 monthly average money available to invest
 
Compare it to just a simple contribution and the picture is no longer as pathetic as it would be. And I hope, these numbers will keep growing.
 

I also have a plan to reach a certain amount of cash available for options trading. The goal for 2017 is to reach $6,000 dollars cash buying power for options.

As of today, we only have approx. $4,293.24 dollars in ROTH IRA available for options trading.

 
With that money available for trading, in June 2017, we generated $192.00 dollars income from options 5.82% return on invested capital.

 

 



This month we opened only a few new option trades. Otherwise we mostly maintained the existing trades.
 

ETE
 

We had a trade against ETE stock. ETE continued dropping all the way down to $15 dollars a share. We own 100 shares at $19.00 a share and continue selling covered calls. However, with the stock so much down it became difficult to sell a covered call at 19 dollars strike. We thus rolled the trade into October 2017 and 18 strike. Shortly after the stock recovered much of its losses and as of today it trades at $17.96. I may roll slightly higher again and about a month away to raise the strike at 19 or 19.50 and then let the trade end in the money.

In the meantime, we will continue collecting dividends.

ETE triple play – dividend capture trade – TRADE OPEN
 

As soon as the trade above closes, our next trade will be a covered strangle (we will sell a new covered call and bull put spread against this stock) to generate more income.


 
AGNC
 

I tried to sell covered calls against 100 of our 172 shares of AGNCbut it turned to be a bad choice.

Unfortunately, AGNC is not a very good optionable stock. So we haven’t loss money but we neither made them. It was just a wash trade not worth doing. The trade ended this month, when we sold our 100 shares (when our calls got called away) and we got assigned to the puts we sold afterwords. We are back at the original 172 shares position and we will leave it that way. I do not plan any new trades using this underlying.
 

Here is the trade against ANGC shares:
 

AGNC covered call (ROTH) – TRADE CLOSED
 

 
TECK
 

TECK Resources (TECK)is doing well although it gave us some hard time too when the stock was dropping hard this month. It later recovered and we are in good shape again.

Here are a few trades I opened, closed, or carried over this month:

Options Trade: TECK Iron Condor trade (ROTH IRA) – TRADE OPEN

New Iron Condor using TECK in ROTH IRA – TRADE OPEN

TECK Iron Condor trade (ROTH IRA) – TRADE OPEN

TECK Iron Condor (ROTH IRA) – TRADE CLOSED

TECK June 30 Iron Condor closed (ROTH IRA) – TRADE CLOSED
 

STX
 

At first, Seagate Technology (STX) looked like a disaster. With a first technology sector selloff however our calls closed for 0.05 debit, and when the stock recovered, our puts closed soon after. We could then open a new Iron Condor using this underlying.

Our goal is to increase cash in our ROTH IRA account enough that we can start trading a triple play trades against STX and allow stock assignment so we can start collecting dividends and buying shares of STX. As of now, we can only trade Iron Condors and prevent stock assignment and if it ever happen, we will have to liquidate the position immediately, although at a loss.
 

Here is the STX trade done in May:
 

STX Aug18 Iron Condor (ROTH IRA) – TRADE OPEN

New Iron Condor with STX in ROTH IRA – TRADE CLOSED

 

 · Our dividend investing outlook

 

I am still very bullish on the US stocks as the economy keeps growing. Our GDP recovered from 2016 drop to 1.3% and now we are back up to 2.1%. With consumer confidence rising again we may actually see 3% GDP again. Thus would have a positive impact on stocks and push them higher.

On top of that, the US banks passed a stress test and FED cleared the way for banks buybacks and dividend increases.

Personal income of consumers grew by 0.4%, which is also good after years of salaries stagnation.

What is your stock market expectation?
 






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Posted by Martin July 01, 2017
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A bitter return to Lending Club


I always look for investing opportunities which are, or can be, easily achievable to me. By that I mean that they are within my reach of limited money to invest.

I started investing in Lending Club in 2012 and I was very successful in it. Yes, I was using a loophole to avoid default notes since I was not given an opportunity to participate in a more detailed verification process or at least see it and its results.

Thus you ended up buying notes without any possibility to react to bad notes unlike with options where you can roll them and get better. But that is past. Here you can review my reasons for no longer investing in Lending Club.

 
Lately, I was thinking I may return to the club and start investing again, small amounts, maybe $25 every month and invest in A or B notes only.

 
To my surprise, when I opened my old Lending Club account and tried to browse available notes to invest, there were no A nor B notes! The system only showed 70 notes total!

And none of them I would consider to invest in!

 
Lending Club
 

Quite a shock to me as I remember when I was investing in 2012 – 2013 there were thousands of notes to choose from. It was almost impossible to have nothing to choose from.

I played with the filters a bit to see how the notes offer changes and I excluded notes with delinquencies in the past and notes worse than C grade and the list shrank to 13 loans available to invest:

 
Lending Club
 

I tried to search other bloggers what they posted recently about investing in P2P and most of the posts were from 2015 or 2016. Nothing recent!
 

Is Lending Club dead then?
 

I found a recent article reviewing Lending Club learning that today, if you want to start investing in Lending Club, you need at least $1,000 dollars account.

However, this rule doesn’t apply to the old accounts like mine.

There fore I am planning to give Lending Club a new try and start investing again.

 

 · My Lending Club renewed experiment

 

Here are my new criteria to start investing in Lending Club again:
 

1) I will deposit a small money back to Lending Club

2) I will invest $25 dollars per month to loans of grades A, B, or C (I am aware of diversification and I have a different opinion about it, see below)

3) I will be reinvesting proceeds to new loans but invest only $25 per month

4) I will invest only to loans requiring less than $10,000 dollars loan amount

5) No past delinquencies, public records, or any other defaults

6) I will buy a new loan every month first business day.

 
Let’s see how this is going to work.

 

 · Diversification MHO (my humble opinion)

 

People (and Lending Club) keep saying that you have to diversify over a 100 notes in order to be successful. Thus they recommend you to invest at least $2,500 dollars to reach such diversification.

But I think they do not take into account time and spreading that diversification over time. It doesn’t matter whether I buy 100 notes now and 20 of them default within a month or I buy 1 note every month and it would take me 100 months to reach $2,500 limit they require while 20 notes over 20 months will still go below. I will lose that money either now or later. Thus it doesn’t matter whether I lose them now or ten months later.
 

Here you can review all my posts about my experience with Lending Club.
 






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Posted by Martin June 30, 2017
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Markets lost 2% intraday yesterday, should we be worried?


Bears are coming out of the woods lately. Many say: “I told you so.” Are we turning into a long anticipated correction?

I am not so sure.

Yes, the recent market behavior looked scary:

 
SPX
 

The markets lost 2% intraday yesterday and broke below 50 day moving average. Later on it erased some of the losses.

Today, the market started higher but couldn’t keep up and dipped again. We finished where we started.

 
This market turbulence had a devastating impact on our portfolio too. During the whole month our net-liq grew steadily up and all our positions seemed sitting well in gain territory.

The last two days in the market (the tech stocks sell off) erased it all and we will finish June with substantial loss. Unrealized loss, but loss which makes me uncomfortable.

 
However, I still think this is just another dip. A gift to investors with a plan. Although the stocks lost 2% the US economy is growing and in fact accelerating.

This selling pressure from anxious bears is just an opportunity to buy the dip.

In the last six months, S&P 500 grew by 7% and Nasdaq by 14.4%. That is a good progress. And it seems we will see more uptrend as GDP is again pointing up.

Bear market
(credit: Hedgeye.com)

In 2015 our GDP peaked at 3.3% and since then, it has been sliding down to meeker 1.3% by the second quarter of 2016. For the rest of 2016 and in 2017 we saw GDP rebounding back up to 2.1%!

Are we to hit 3% GDP growth again?

We have seen a year of accelerating economy and consumer confidence. These will push the markets higher again.






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