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Posted by Martin June 14, 2017
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New Iron Condor using TECK in ROTH IRA


UPDATE: June 14, 2017
 

We rolled our June 30th 17 strike into November 17, 2017 expiration and 17 strike. We also added new call side creating a new Iron Condor:

 
BTC 1 TECK Jun30 17.00 put
STC 1 TECK Jun30 15.00 put
STO 1 TECK Nov17 17.00 put
BTO 1 TECK Nov17 15.00 put
 
@ 0.25 credit limit

And here is the call side addition:

STO 1 TECK Nov17 19.00 call
BTO 1 TECK Nov17 21.00 call
 
@ 0.45 credit limit

 
Total credit received 0.70 + previous credit 0.19 = 0.89 credit.
 

UPDATE: June 08, 2017
 

This morning, our call side of this Iron Condor has closed for 0.02 debit:
 

BTC 1 TECK Jun30 22.00 call @ 0.02 debit
 

We still hold the put side waiting for it to either end or be rolled.
 

ORIGINAL TRADE: May 22, 2017
 

 






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All Dividend Investing,  Options Trading,  Personal Finance
Posted by Martin June 06, 2017
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Buying monthly dividend income Motif


I decided to take a small experiment and buy my monthly dividend income motif tomorrow morning using margin. I will only use a small portion and buy for the minimum of $250 dollars only.

Will the dividends be able to pay for the loan?

This trade should answer the question in real time.
 

Here is my motif:
 

 

 

If you are interested in buying this motif as an entire portfolio (with this motif you can buy all shares in the motif with as little as $250 dollars and buy fractional shares similar to when you purchase mutual funds, but in this case, the motif is in fact your own mutual fund and thus you do not pay hefty fees to the fund manager – unless you decide to pay to yourself.
 

If you do not have a motif account, you can open one here and have one month free investing!

 

Or would you prefer investing into a classic DGI portfolio?
 

If you like dividend growth investing (DGI and do not want to spend time building your own portfolio one stock at a time but be rather diversified with 30 stocks right away, you can buy my DGI motif like a mutual fund and keep investing small amount of money every month (buying fractional shares) no fees, no limits, invest as little as $250 per trade:
 

 

 
Do you have any questions? Do not hesitate to contact me!






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Posted by Martin June 02, 2017
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My watch list for June 2017 options trading


Many people keep asking me what stocks I use to trade and how do I choose them.

I try to explain to them that my stock selection is simple. I have a trade plan and part of the plan is also what stocks I want trade.

Over the years I learned not to focus on all 50,000 stocks or so but have a certain criteria the stocks must meet in order for me to trade them. I do not trade expectations, stories behind the stocks, predictions, or wishful thinking.

Many times in the past I tried to create a story. I tried to find a reason for trading a certain stock. I tried to interpret fundamental data to back up my story creation and then tried to find a technical data by chart reading to further strengthen my theory of why I should trade a certain stock.

And guess what. I was almost always wrong. But I so convinced myself by creating a story and then finding data further supporting my conviction that I actually deceived myself into a trade I knew nothing about but my own chimera. And as soon as I opened a trade, it went in the right opposite direction. I lost money. And I was totally disappointed.

Does this sound familiar to you?

If yes, then why you keep doing it? Do not do it!
 

When people ask me why I trade a certain stock I usually have no answer to them besides that they meet my criteria.

First, I started with a prime goal of trading options against dividend stocks.

Why dividend stocks?

Because if I get assigned to the stock, I will be OK to buy such stock and hold it as long as I will be able to sell it again and during that time I will be collecting dividends. Thus it is a win-win situation. Right?

However, not all of 50 or more dividend stocks in my dividend growth stock watch list are optionable and not all of them have options meeting my criteria to trade them.

So I narrowed my 50 stocks watch list to about 19 stocks which are good to trade them. Of course, this doesn’t mean that I trade them all. I trade only a hand full of them. I regularly scan them to make sure they meet my rules. I take out those which do not and add those which do.

And after those stocks are identified then the whole trading is just pure mechanical trading. It’s like one, two, three… trading. And I trade those stocks again and again as long as they keep to meet my rules.

 
And here is my watch list for June 2017:
 

Symbol
ABT
ADM
BAC
BMY
COP
EBAY
ETE
M
MDLZ
MGA
MOS
MU
NUE
OIH
STX
TECK
WFM
X
YHOO

 






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Posted by Martin June 01, 2017
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May 2017 options income


May 2017 is over and it is time to report how we did with our options trading.

My plan for April 2017 was to make $1,966.19 dollars of income.

This month we weren’t able to reach the goal as we received only $1,475.59 dollars of option income.

Overall, May 2017 showed us a stagnation in our trading account. We struggled to grow the account despite opening new trades as will be seen below. Our equity grew, our cash value grew, but our net-liq went down this month. Also our income lacked behind the plan.

 

 · 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.
 


 


 

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 · Options Trading Results

 

Our trading in May 2017 disappointed as we struggled to grow the account and made only $1,475.59 dollars which was only 6.12% monthly revenue on invested capital (ROC).

Last year we could achieve 10% ROC or more. Our account average is at 9.45% ROC (better than in April) but still lacking to maintain the original growth.

However, we increased our investments by adding more new trades (we invested approx. 8.17% more of available cash this month) and our equity grew by 3.53%, this had no impact on our net-liq as the net liquidation value actually dropped by 2.63%.

We have a few trades ending soon and if Mr. Market stays calm in the next two months we should be able to close a few significant trades for a profit, such as our Amazon earnings play trade. This should have a positive impact on our net liquidation value and we should start seeing some growth again.
 

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 May 2017 we made: 27 trades
Total trades in 2017: 207 trades
May 2017 options trading income: $1,475.59 (43.07%)
2017 portfolio Net-Liq (net)*: $3,895.19 (-8.48%)
2017 portfolio Net-Liq (gross)*: $24,104.72 (-2.63%)
2017 portfolio Cash Value (net)*: $31,660.19 (7.34%)
2017 portfolio Cash Value (gross)*: $51,869.72 (3.75%)
2017 portfolio Equity (net)*: $35,913.19 (6.54%)
2017 portfolio Equity (gross)*: $56,122.72 (3.53%)
2017 Liability/Debt: $20,209.53 (-1.42%)
2017 overall trading account result: 18.46%

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

That was the main reason behind our net liquidation value stagnation. Many bad trades being moved and rolled and running out of available cash to trade. However, we opened and maintaind the following trades:
 


Amazon (AMZN) was our earnings play we opened originally in February 2017. The play didn’t go as expected and the stock basically crashed. We opened only a bull put spread and when the stock smashed below both of our puts I decided to roll the trades rather that closing them for a full loss.

And I do not complain. It was a great trade and I still believe, this trade will end as a great winner. The best trade in 2017, in fact.

After I rolled the put spreads, I added calls converting the trade to an Iron Condor. This could have been a mistake as the stock recovered sharply and since then continued higher. I had to roll the entire Condor several times to keep the call side out of the money. In the end, I converted one call spread into a put spread so I do not have to do anything with it anymore.

I still have a second call spread which will give me a bigger headache in the near future and if the stock continues this impressive rally, I might do the same conversion as I did with the first trade.
 
Here is the trade review:

 
AMZN earnings play – TRADE OPEN
 


In May we opened two new strangles against Teck Reasources (TECK). It is quite cheap to trade this stock as the entire strangle requires only around $200 buying power. As long as it continues offering an interesting premium (and volatility) I plan on trading this stock.

In fact, I plan on creating a ladder using this stock and open strangles with expiration in every week.

 
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 Options Trading April 2017 rank

 

In April 2017 (last month) we ranked #1 in dividend/options income in Easy Dividend ranking chart run by Christopher (Chri) from Austria which was a great place to achieve and I am proud to reach such place.

It is because I do not expect ranking well for May.

I will be happy if we achieve a fifth or sixth place for May 2017. But the results for May are not yet available, so we have to wait.

You can review the Revenue Community chart in April 2017 – Community Edition results here.

 

 · Options Trading June 2017 outlook

 

We expect the stock market to go higher in the next month as the US economy keeps improving. It may be a choppy move though as there are many expectations on Trump delivering his promises on tax cuts, for example, which may not happen. That may send the stocks down.

But as we could see in the recent past every selloff got immediately bought back as could be seen in the following chart:

 
SPX trend
 

I expect this trend to continue and I also expect the market showing some decent swings. And that’s what I like to see as it is what will make you money. And investors know that the economy is growing and they will be ready to buy in every move down.

As Robert Shiller himself mentioned that this market can go even higher. More than 50% higher. If so, we may see S&P 500 reaching 3,500 level in the future.

You can continue reading my outlook for the next market move in my previous post about our dividend investing results.

 
What do you think about options trading? Do you trade options to generate income as a main trading strategy or just a dividend income supplement? Tell us about your trading and results!






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Posted by Martin May 30, 2017
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ESV – a trade which gives me a headache


Last year I opened a put trade against Ensco plc (ESV) stock. Back then, it looked like a no brainer trade.

The trade provided a good premium and it seemed I would be out quickly.

Since then the trade went south and I have a hard time to get out.

Originally, I sold 11 strike puts. After a few weeks the stock went down and I let the puts assign. Since then the stock traded below $11 and there was only a short time window when it reached $12 again and, fortunately, I got rid the shares selling them.

I should have closed my positions too.

But that is all in the land of coulda, woulda, shoulda. I didn’t do it but rather decided to play this trade until the very end.

And I kept rolling this trade and also adding calls.

 
As of today I own the following trades against ESV:
 

-2 ESV Dec15 9.00 put
-2 ESV Dec15 11.00 call
 

and

 
-6 ESV Jan19 8.00 put
-6 ESV Jan19 13.00 call
 

Today, the 13 strike calls closed for 0.05 debit. Since the stock continues down, I decided to roll the puts lower:

 
BTC 6 ESV Jan19 8.00 put
STO 6 ESV Jan19 7.00 put
STO 6 ESV Jan19 7.00 call
 
@ 0.10 credit limit
 

 
Ensco ESV
 

The credit received is nothing extra and the overall trade will most likely end with zeroes, but the main goal for this trade was to lower the puts down even if the credit will be insignificant. The other positive I see here is that I could keep the trade in January and we didn’t have to roll it into the next available expiration day which was January 2019 and that is something I didn’t want.

Now we have a straddle and if the stock goes down or up I will roll it gain be it either puts down or calls up.

We will see when we get there. Now it is a waiting time.
 






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May 2017 dividend income


May is over and it is time to once again review our dividend income in our ROTH IRA account.

It was again another successful month as our annualized dividend income increased. We haven’t received as many dividends as in April but it still was a successful month.

In our ROTH IRA we collect income from dividends as well as options trading.

Both incomes helped the account balance growth although this month our overall balance dropped slightly.

But if you follow my blog and remember my dividend growth philosophy you know that the account balance is not important to me. It is the income what’s the most important!

As long as my regular dividend or options income is stable, secure, and ever growing, I am happy and do not care what the balance is.

I am actually happier seeing my stocks dropping down as I can be reinvesting my dividends and buying cheaper shares.

So, how did we do this month?

This month, we received $89.48 dollars in dividends. It was $2.01 dollars less than in the previous month.

Our options income reached $108.00 dollars of received premiums. It was also less than in the previous month but we still exceeded 3% mark and achieved 3.18% monthly revenue on invested capital (ROC).

Our average annual options income is 2.65%.
 

Although our month-to-month dividend income was less than the record month of April, I am happy to see that our annual dividend income increased again to $1,083.88 from previous month of $1,074.87 (0.84% increase MoM). This is a great increase compared to $883.48 annual dividend income from 2016 (22.68% increase YoY).

 

 · 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

 

Our May 2017 dividend income was 22.68% better than last year. This month we received $89.48 in dividends which is the second highest dividend income this year.

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 = $89.48 (account value = $22,715.63 -0.71%)
The account is up 9.33% for the year.

 

 
Monthly dividend Income:

 

 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · ROTH IRA options income

 

Our options income reached $108.00 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)
$90 monthly average options income
$88 monthly average dividend income
$228 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. $3,397.94 dollars in ROTH IRA available for options trading (6.17% increase).

 
With that money available for trading, in April 2017, we generated $108.00 dollars income from options 3.18% return on invested capital.

 

 



This month we opened a few new trades generating options income (mostly Iron Condors). We also have a triple income play trade using ETE stock as underlying. Although ETE is dropping last few weeks, I am optimistic on the stock and used strategy. I hold 103.076 shares of the stock which generates nice 6.57% yield so I keep buying more shares as the stock goes lower.

 
I also keep selling covered calls against the position generating more income. Here you can review the details of the trade:
 

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.


We also own 170.949 shares of AGNC stock and sometime ago we decided to sell covered calls against these shares too.

Unfortunately, AGNC is not a very good optionable stock and when we reviewed premiums for the future trade I couldn’t see any good premiums to trade. We will keep an eye on this stock and try to sell a new covered call as soon as the old one ends but as of today, it is unlikely.
 

Here is the trade against ANGC shares:
 

AGNC covered call (ROTH) – TRADE OPEN
 

In May we opened a few Iron Condors using TECK Resources (TECK). A few investors from our Facebook Group have asked me why I was trading TECK.

As you know, I do not have reasons for trading certain stock. People want to have a reason, some love story, or prediction behind the stock. I do not have any of it. I do not believe in it. And I do not want to spend my time searching for a story or creating one.

All I want, is a knowledge that the company can produce and sustain its operation and some proof that it will be here in the next 20 years and that is enough for me to trade it.

But again, all this depends on the investing or trading strategy you use. As a dividend investor I would be looking for different signs of a company vitality than as an options trader.

And as an options trader I look for metrics such as buying power, premiums, volatility, etc. As long as the stock meets my criteria, I trade it. And if the stock goes up and down, I do not care. I actually make money when that happens.
 

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
 

Another stock I trade options against is Seagate Technology (STX). There are people bashing this stock and saying it will not survive, its dividend is not sustainable, etc. But they have been saying this for years.

In our trading account I have been trading STX for three years now. And although it is volatile, it survived all the predicted catastrophes. And in fact, by buying a SSD manufacturer they are well positioned to cover all segments of data storage market (clouds as well as physical storage disks).

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:
 

New Iron Condor with STX in ROTH IRA – TRADE OPEN

 

 · Our dividend investing outlook

 

Many dividend investors I follow keep complaining about the stock market and selling their positions. Many use Robert Shiller’s CAPE metrics as an evidence of the overpriced stocks and predicting an imminent stock market crash.

It is sad to see so many people having it wrong and setting themselves to lose on the missed opportunity.

 
Many forget or refuse to believe that the US economy is growing and improving. Just follow the data and you will see it. Manufacturing index was better again than in the previous period of time.

 
Profits are accelerating as 479 S&P companies reported their aggregate year-over-year sales and profit growth of 8% and 14.9% respectively.

 
What is a great indicator of the US economy heating up (consumers are back and start spending money again)?

It is Technology (XLK) and Consumer Discretionary (XLY) indexes going up. And it is exactly what is happening today. Both sectors are leading the pack as S&P 500 is hitting all time highs.

 
Every sell off (blamed on Trump who whether you like him or not has nothing to do with it as we are still riding the Obama’s economic plan) was immediately bought back! Here is the most recent one:

 
SPX trend
 

Since Robert Shiller came up with his cyclically adjusted PE (CAPE) for the market all sorts of gurus started using this metric to predict the market.
For the last two to three years I have been hearing that the market is expensive and due to crash. I have seen dividend investors selling their stocks in expectation of a market crash because the “stocks were expensive”.
And today, Robert Schiller himself said that this bull market is not over at all and it may go up higher for the next 50% amid above average CAPE.
The lesson?
Do not predict the market, trade what you see and not what you think you see. Do not trade expectations, feelings, maybes, or your own predictions.
No chart, oscillator, metric, or a Nobel Prize winner has a predictive power. It may help you to set a trade up, find support or resistance, but after you enter a trade, it becomes invalid and everything can happen. So be ready to and know what you would do in that case and not what the market should do because of your oscillator said so.

 

 

As a dividend growth investor you invest for a long haul, not for a couple of years. As such, you can afford to be extremely aggressive.

You can afford to use an extreme leverage and start deleveraging as you are nearing to your retirement. If you invest for the next 20 or 30 years any market sell off will be an insignificant blip on the chart which you will not be able to spot on it anyway.

In the next 20, 25, or 30 years you will have a plenty of time to fix any errors or mistakes you make today, so don’t be afraid of the market volatility or even market’s sell offs when they happen and stay the course. Have a plan how you want to invest, into which stocks, and stick to the plan no matter what Mr. Market is throwing at you. And that beast will tempt you. It will tempt you a lot.

I recommend you a book Lifecycle Investing by Ayres and Nalebuff. It will open your eyes on leveraging your portfolio in early years when you are at the beginning of the journey. But do not get me wrong. By leveraging I do not advocate gambling! You must understand the strategy before you apply it or you would be doomed to ruing your portfolio instead of growing it.
 

What was your dividend income this month? Do you have a written investing plan? Or do you need help to create one?
 






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All Dividend Investing,  Options Trading,  Personal Finance
Posted by Martin May 25, 2017
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Options Trade: TECK Iron Condor trade (ROTH IRA)


Opening another TECK Iron Condor in ROTH IRA:
 

BTO 1 TECK Jul7 14.00 put
STO 1 TECK Jul7 16.00 put
STO 1 TECK Jul7 21.00 call
BTO 1 TECK Jul7 23.00 call
 

@ 0.35 credit limit
 

TECK @ 18.64
 

Trade executed at 0.35 (or $35) credit.
 

IV of the trade: 44.87%
exp. move: $2.3
 






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ETE triple play – dividend capture trade


UPDATE: May 22, 2017
 

The trade executed today morning and we collected 0.35 or $35 dollars credit.

Now we will wait until expiration which is in June 23, 2017 for the call either expire worthless (if the stock stays below $19.50 strike) or ends in the money (ITM) in which case we will get assigned and sell our 100 shares of ETE.
 

 






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Posted by Martin May 22, 2017
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TECK Iron Condor trade (ROTH IRA)


UPDATE: May 22, 2017
 

The trade executed this morning. As the old Iron Condor closed, this new opened and we are in the trade. We collected 0.35 credit or $35 dollars. Now we will wait for this trade to develop.

We also placed buy back orders for both our short legs (to buy back our short 16.50 put and 21.00 call) for 0.05 debit.

 






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Posted by Martin May 22, 2017
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TECK Iron Condor (ROTH IRA)


UPDATE: May 22, 2017 TRADE CLOSED
 

Today morning, our puts closed for 0.05 debit. This closes our Iron Condor with 13.20% profit in 32 days and 150.56% annualized return.
 






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