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March 2017 dividend income


March 2017 is over.

It was quite fast. I almost haven’t noticed. And many things happened in March. Good or bad. But financially, I did well and actually better than expected; both in dividend income and options trading income.

This month, we received $85.86 dollars in dividends.

It is slightly less dividends than last month.

But it was more than in the same month last year. In March 2016, I made $70.46 in dividends. That is 21.85% increase year over year.

Definitely, this month was another success!

Our annual dividend income increased to $1,068.55 from previous $1,062.66 of annual dividend income. This is a great increase compared to $883.48 annual dividend income from 2016.

 

 · ROTH IRA investing/trading strategy

 

Here is my investing & trading strategy I use in my IRA account. If you want to read about this strategy

 

 · ROTH IRA dividend income

 

As I mentioned above my dividend income was better than last year. I made $85.86 in dividends and all dividends were reinvested back to the companies which generated them.

 
Here are some numbers:
 
Dividend Income = $85.86 (account value = $22,479.74 +1.23%)
The account is up 8.20% for the year.

 

 
Monthly dividend Income:

 

 
Last month, we purchased 100 shares of Energy Transfer Equity, L.P. (ETE) using triple play strategy. We sold cash secured puts with 19 strike and got assigned to the stock. We bought shares at $19 a share.

We were selling covered calls against the position with 19 strike. The calls kept expiring worthless in March. We will continue selling covered calls in April.

 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · ROTH IRA options income

 

As I mentioned above we trade options in our ROTH IRA account to generate income which could be re-invested into dividend growth stocks.

We are in an “accumulation phase” when we deposit our sparse contributions of $50.00 dollars monthly and keep that cash in the account to trade cash secured options with it. This way we generate income from the options.

As of today, we only have approx. $3,017.70 dollars in ROTH IRA available for options trading. The goal in 2017 is to reach $6,000 available dollars for options trading.

 
With that money available for trading, in January 2017, we generated $58.00 dollars income from options 1.92% return on invested capital.

 

 

In March, we had options trades opened using stocks Ensco plc (ESV). We didn’t have to do anything with those positions.

We traded options using Energy Transfer Equity, L.P. (ETE). We also decided to add an Iron Condor using Seagate Technology plc (STX). We had to roll the trade once in March to avoid assignment. Unlike ETE trade, we do not want assignment of this stock as of now.

 

 · Our dividend investing outlook

 

We saw the market getting to a complete halt in March. It even reversed and dropped.

We saw the first dip of more than 1% since election.

Many saw this as a positive event and I tend to agree with them.

The dip was bought again by investors but there weren’t enough buyers to move the market to higher highs. It still may happen if the purchase continue, but as of now, we are at a cross road.

Will the market go higher or are we seeing a creation of a new lower high?

Here is what I am seeing:

 
SPX trend
 

If the market fails to break the thin grey line, we will most likely see a correction.

While many may freak out. I am actually happy about it.

I keep telling to all dividend investors who are not comfortable with the current market that it doesn’t matter to them where the market is.

Of course, this depends on where you are in building your dividend portfolio but if you are at the beginning or even middle of the accumulation phase, you do not have to worry about crisis, panics, sell offs, or any sort of disasters.

As a dividend investor, you keep buying and building your dividend income. And when stocks drop even 50% you should welcome it with open arms and keep buying, keep reinvesting your dividends.

I have heard investors saying that they do not want their portfolio to drop 40 or 50% and then wait for a long term recovery. They want to time the market, sell now and buy back when the market drops. I have watched investors selling in August and September 2016 when the market was at all time high.

Back then the market was at 2120 and they couldn’t stomach it. They kept selling (trimming) their positions.

Today, the market is at 2340.

220 points higher!

So, you sell now and keep waiting for a drop, sell off, or correction which may not yet come. It may happen in six months from now. And you will be sitting sidelines depriving yourself of dividend income which could have been reinvested.

And if that really happens, I do not mind that my portfolio value drops.

I do not follow my portfolio value.

I follow what my dividend income is.

When building a dividend growth portfolio, you should always have in mind what was the reason you started building that portfolio.

In my case, it was income.

So if I invested $22,000 dollars to stocks which pay me $1,070 dividend income and there is a sell off and my portfolio drops to $9,000 dollars but keeps paying me the same $1,070 dividends, should I be concerned about the value?

No, my reason was income. And with the value drop my income hasn’t changed. I do not have to worry at all but on the contrary, I will be very happy that my dividends are now buying a lot cheaper stocks!

Many of my stocks in my dividend portfolio not only recovered well from the 2008 Great Recession, they actually increased dividends! Why selling them then?

Let me know what you think!
 






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Posted by Martin March 30, 2017
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Trading Diary #3 (LULU) down more than 23%


LULU tragedy continued this morning when the stock opened down more than 23%.

Surprisingly, it didn’t have any worse effect on my account than what was priced in last night when I recorded my notes on this piece if crap.

You work hard and try to improve and make a few bucks and after you start seeing some results and improvement you get crashed.

 
As one trader I spoke with said:

“Trading in the stock market is the hardest way to make easy money.”
 

Well, this sell off didn’t hurt my account more than what I saw last night. Yes, I still did receive my margin call but it was only $38.45 dollars. Nothing too harsh to freak about.

Of course, if I haven’t overtraded my account last year and instead of dragging those trades around rather unloaded them I didn’t have this problem today.

Here is a new look at the stock disaster:

 
LULU disaster
 

My goal for 2017 was to actually unload my positions and get the account in line with my rules on how much buying power I can use. I probably need to be more aggressive in doing so.

The LULU tragedy allows me unloading at least the call side. So I closed one call which lost value and I will wait for the other one to go the same path. I might close it next week too.

 
LULU disaster
 

Surprisingly, this hiccup will have no effect on my March cash income. I still will end up March positive on cash flow side.

But my net liquidation value got hit very hard. And the net-liq is a metric I use to track a valuation of my account. From this perspective, March will be a terrible loss. But it is just a paper loss until margin calls start forcing you to be closing positions which are currently losing money. Hope I will not have to go this direction.
 






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All Dividend Investing,  Options Trading,  Personal Finance
Posted by Martin March 29, 2017
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Trading Diary #2 (LULU) got crashed


LULU reported 1.00 EPS, WS expected 1.01 EPS. A slight miss.

But the AH chart looks like an end of the world. Blame guidance which made WS over-reacting (as usual).

 
LULU
 

This is a bad blow to my account. Hope, this shit will recover by tomorrow morning opening although I have very low expectations that it would happen. I think this crap will continue lower. But who knows.

Last Q earnings the company beat expectations and it skyrocketed back to 72 a share. This earnings a slight miss and it swamped. What a joke.

But I should have dumped my shares when it jumped up above $70 a share and not holding the stock! Stupid me!

Because surprisingly, it is not the options in my account which are hurting me now. It is the f** stock!

 
LULU
 

As you can see, even my puts are still making me money! It is the stock which is now down by almost $2,000 dollars which blew my account now. Another reason for not trading high flying non-dividend stocks. If this happens to a dividend stock, you will at least get paid for holding the stock. With LULU, I get nothing.

Tomorrow will be a bad day!






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Posted by Martin March 29, 2017
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Trading Diary #1


(Wednesday, March 29, 2017)

Wow! And wow again. If you start predicting the market, this is what you get. I am glad I stopped predicting the market but focus on trading and adjusting those trades.

But sometimes this can backfire too.

Like my US Steel (X) trades which recently the stock acted so violently that all my positions in X were totally destroyed. And I mean out of order.

What happened? First the stock sold hard, so I rolled worthless out of the money calls into the in the money calls so I could pull my deep in the money puts up the hole. But then the stock rallied again making my calls a problem instead of a help.

Now I have to work the calls out of the hole.

money

But, this is still a part of my strategy. Although it can be frustrating at times.
 
 

The next thing I did yesterday was that I somewhat liquidated a small portion of my WYNN contracts.

At the beginning of the month I had 6 strangles against WYNN with January 2019 expiration. Yes, you read it correctly. It is an almost two year contract.

Last year, I made $20,000 on WYNN, but in December 2016 WYNN bit me hard. A few very hard sell offs flushed my 100 strike puts to the sewer. And my net-liq with it.

I was more than $6,000 dollars in a margin call. I had to act. I took some losses by closing a few contracts and the remaining ones I rolled. And I rolled them several time until I ended in January 2019 expiration day.

I ended with 6 strangles and very good strikes – 80 strike puts and 100 strike calls.

I thought, this would safe and wide enough spread so the stock could do whatever it wanted for the next two years.

Wrong thinking!

I still managed to lower my strikes on the puts side even lower, down to 77.50 puts, and rolling calls from 100 to 125 strike. I was also able to close 2 contracts at the beginning of March 2017. I was left with 4 contracts total.

It cost me around $2,600 dollars. I expected March to be a losing month. Yet, I continued trading and made all that loss back! I made the entire $2,600 plus $300 on top of it!

This makes me happy as I haven’t expected this at all.

Yet soon I was hit by WYNN again. The stock, which was trading in 2 years long channel of 100 – 80 price suddenly broke up from that long consolidation. The rally quickly endangered my 125 calls.

I managed to roll the entire trade higher – calls to 140 strikes but I had to roll my puts higher too to 100 strike, 105 strike and 115 strike. This helped me to unload another call contract yesterday for a small loss which is still covered by money I made this month.

It still baffles me as my WYNN trade blocks over $15,000 dollars of my buying power! It is dead money!

Now, I have 3 call contracts and 4 put contracts. Still blocking a lot of cash!

Next month, I plan on doing the same thing as this month. I will close another either put or call contract for a loss and will trade it to offset that loss.






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Posted by Martin March 27, 2017
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What a day today!


SPX opened down significantly as investors digested Trump’s healthcare failure. At least that’s what headlines were showing this morning.

Evidently, they had great digesting today as the markets recovered most of the losses and went from 0.98% loss to about 0.10% at the end of the day. Let’s just hope that they will not suffer from diarrhea tomorrow.

The Trumpfear seems to be premature and over-reaction.

I took advantage of the move and adjusted a bunch of my trades (see the picture below). This brings my trading results to be positive for March as at the beginning of the month, I closed a trade for a loss hoping I would be able to offset the loss with other trades. It just happened. I realized $2,600 loss on March 1st closing the bad trade.

Today, I am slightly in green. If nothing changes, I should be finishing this month with around $300 dollars profit. Basically going from negative $2,600 to $300 positive. Although, I would love to see the entire amount as my monthly gain, I am happy. I got rid of a bad trade and still finish in green.
 

Here are the trade adjustments from this morning:
 
Trade adjustments
 






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Posted by Martin March 26, 2017
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Trumpfear


Lately, I was quite busy and actually not in a good mood, so I wasn’t publishing my trade adjustments against US Steel (X) and Seagate Technology (STX).

I was able to roll those trades quite successfully last week although both stocks were losing after a big selloff in Wall Street.

And tomorrow, it seems we will see yet another selling as fear returned back to the market. It was quite obvious to me that Trump is not going to win nor deliver any of his promises. He thinks it is a piece of cake to govern the country of 300 million people.

However, I was riding the optimism others were happily sharing.

Looks like, after Trump’s loss of repealing Obamacare the same people now are in fear that he might have the same issues to deliver his other promises.

Duh!

Unless Trump becomes a supreme and only rule of the United States, a sole dictator (who he for sure is and thanks God for the Constitution!) he has to negotiate. And although he makes things look like he is a winner, he actually is not.

He calls himself a great negotiator who masters an art of a deal, but a recent video I saw today following him since 1975 unto 1990 show that he actually was quite bad in making deals.

Watch for yourself and make your own judgment.

 

 

So, the optimism seems to be gone for some time and we may see some selling coming.

It may be a good thing. I depends where you are and what your plans are. Mine are well defined. I trade options and invest into dividend stocks. With options I can trade both sides. But I trade strangles and large and violent moves are not very strangles friendly.

Yet last week I could roll my trades however, my put sides are still in the money and in danger. What danger? A danger of assignment. The deeper they get the greater danger of early assignment. If this continues, I will have to start enlarging my expiration time from weekly to two or three weeks. I will see next week. If selling takes over, it will be a sure thing.

As a dividend investor I actually welcome this selling. I will be reinvesting my dividends and buying more shares for less. What a gift!

I still look at my dividend investing from the next 25 years investing horizon perspective. And this selling, or even Trump rally is quite insignificant.

For some time I have been recording events in the S&P 500 chart. Just for curiosity. I do not do it to predict the market, I do not do it to look for reasons and excuses. I do it just as a time stamp. I want to look back and see how futile we investors and traders as a crowd sometimes are:

 
S&P 500 time stamp
 

This “event recording” became my new pet. When I see all the talking heads predicting the disaster and it doesn’t happen I am laughing. And also when they are too optimistic, predicting new highs, market going to the moon and it crashes, I am also laughing.

Tomorrow we may see Trumpfear in the market.

I will be rolling my existing trades lower and manage them through the turmoils in my trading account. In my ROTH I will continue holding my dividend stocks and trade options (Iron Condors, cash secured puts, covered calls).

I wish you all success in coming week. Stay calm and do not panic. There is no reason for it. There never will be and never has.
 






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Posted by Martin March 15, 2017
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(3) X strangle rolled


As the expiration is approaching, time to roll my ITM inverted strangle again (as I do not expect this one to expire worthless).

In this roll I continue rolling my puts down and keep calls at the same level. If the stock continues moving higher, I will start rolling calls higher and keep puts at the same level.
 
 

Here is the trade:
 
BTC 3 X Mar17 35.50 call
BTC 3 X Mar17 39.50 put
STO 3 X Mar24 35.50 call
STO 3 X Mar24 39.00 put
@ 0.28 credit limit
 

X roll
 






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Posted by Martin March 14, 2017
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Seagate Technology (STX) triple play adjustment


Last week, I made an adjustment to the Seagate Technology (STX) when the stock suddenly dropped.

Maybe, I was a bit hasty adjusting the trade as the stock seemed to recover the losses. The sell off happened upon a downgrade from some so-called analyst who thought he could predict the future and all those clowns at Wall Street started hastily selling.

Normally, if this was my regular strangle trade I would do nothing about the trade and wait but this was a triple play trade where I didn’t want assignment of the puts at $48.50 a share when the stock dropped to $45 a share.

So I rolled.

I rolled puts down to $48.00 and sold calls at 46.50 strike. By the end of Friday last week, the stock recovered to $47.28…

Maybe, I was too in rush adjusting the trade.

Now my calls were in the money and if the stock continued higher the following week I ran into a risk of having those calls early assigned. That’s not what I wanted.

Thus, I placed a roll trade for Monday morning to adjust the trade once again.

This adjustment however required additional margin requirement. The idea was to leave the existing 48.00 puts untouched. I hoped for them to either expire worthless (should the stock continue higher), let them assign (should the stock stay near the money), or roll them into the next week (should the stock continue down).

 
Then, we rolled our calls into March 24 expiration and two strikes OTM and sell new OTM puts. Here is the trade and existing trade:
 

-1 STX Mar17 48.00 put (existing trade to remain)
BTC 1 STX Mar17 46.50 call (existing calls to be rolled)
STO 1 STX Mar24 48.00 call (new rolled calls)
STO 1 STX Mar24 46.50 put (sold new puts to create a covered strangle)
@ 38.00 credit limit DAY
 

If everything goes well, I expect the original put either expire or get assigned this week. If it expires or I have to roll it, I will buy 100 shares of STX outright. Next week, hopefully the calls will get assigned (and we will sell the shares) and the new puts expire worthless. But as of now we have to wait for the results.

 
STX adjustment

STX adjustment
 

Hope this adjustment would work well.
 

Here is the previous post about the trade which we have adjusted today:
 

Seagate Technology (STX) triple play trade adjustment after stock drop Published 2017/03/09

STX dividend capture – triple play Published 2017/03/07
 






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Posted by Martin March 12, 2017
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Why I stopped contributing to 401k


Many future planner advisers who were trained to sell you their 401k plans to get their share of fees will be outraged if you tell them that 401k plans is a legal way how the financial industry is robbing us from our money and that there are better ways to save money for retirement.

It is stunning how far this industry gambling with our future could go convincing you that you are basically an idiot who cannot take care of his own money so you need them to do it for you.

I bet you have heard many times that Americans have nothing saved, or haven’t saved enough for retirement. While a few decades ago, having saved 50,000 to 100,000 dollars could be enough for retirement, today they tell you that you have to amaze million of dollars to retire. Have you ever tried those retirement calculators online? What was the number they threw at you? One million dollars? Three million dollars?

And even if you save every penny during your productive life, do not buy a house, do not buy a car, do not start a family, but save everything and thanks to enormous, hidden, and compounded fees, and their poor performance you find yourself 30 years later broke, they will be bold in telling you that you haven’t saved enough.

There are many myths people are told to believe about their 401k plans. Some are so outrageous that I can’t believe it didn’t come to me earlier what lies we are told when it goes about our future well being.

Let’s review a few myths and lies we are regularly told to believe and which made me to stop contributing to my 401k.

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Posted by Martin March 10, 2017
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February 2017 options income


February 2017 trading went well. I opened a few very profitable trades which allowed me to close some “skeletons in the closet” mainly WYNN trades.

That meant taking a loss but I am happy about it because that helped me to reduce exposure in that stock and still be profitable.

Again, I expected $1,605 dollars income in February.

I am happy to see that we were able to make $2,213.10 dollars of option income.

 

 · 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

 

As stated above our trading in January was really great and we made $2,213.10 dollars.

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 February 2017 we made: 48 trades
Total trades in 2017: 94 trades
February 2017 options trading income: $2,213.10 (64.59%)
2017 portfolio Net-Liq (net)*: $4,020.72 (-12.22%)
2017 portfolio Net-Liq (gross)*: $24,520.72 (-2.90%)
2017 portfolio Cash Value (net)*: $23,432.72 (-5.21%)
2017 portfolio Cash Value (gross)*: $43,932.72 (-2.85%)
2017 portfolio Equity (net)*: $31,984.72 (-4.81%)
2017 portfolio Equity (gross)*: $52,484.72 (-2.99%)
2017 Liability/Debt: $20,500.00 (0.00%)
2017 overall trading account result: +23.40%

* 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:


 

Or February 2017 trading was successful and we made enough money to pay off the debt and grow our account.

 

 · Options Trading March 2017 outlook

 

I am still optimistic as far as the entire market performance.

Recently, I have read a report originally provided by Gallup survey and published at Stansberry Research Report citing that currently HALF of Americans don’t own any stocks, at all and that global investors sit on $70 TRILLION dollars cash (source: Blackrock President, Rob Kapito, Reuters)

That is a lot of potential prop for the market.

Many investors and traders I follow became worried lately about the market. They say that the stock market has been rising for 8 years and they think it can’t run much higher.

They think it’s up over the last few months because of the “Trump Bump.” But this is not how bull markets end. Bull markets do not end when so much money is on the sidelines.

Bull markets end when everyone is invested… and there’s no one left to buy. And that’s precisely why they end… because with no one left to buy, prices have nowhere to go but down. (Stansberry Research Report)

When investors, currently sitting on a cash, start panic buying that would be the time to start being conservative and moving into cash. We are not yet there.
 

Nevertheless, our goal for March will be reducing exposure and increasing cash. I must admit that we are still over-invested and that means I am breaking the rules of trading small!

This can be seen on our open trades (Inventory) as we increased our inventory by $6,965.80 from January $34,444.90 to February $41,410.70. This had impact to our net-liq and overall performance since the trades (Amazon failed earnings play) are still on and they will end in six months. Until then they will impact our net-liq value.

However, we have a few trades which are about to end and they will help boosting our performance. Then we will stick strictly to our strategy as described above.

This is important for us as our account currently has a potential of trading for a living; if we could successfully reduce the exposure to our technically dead trades and could move the money to our current strategy.

Out of $44,000 dollar account (cash) we can trade only $15,000. The rest of the money is tied to bad trades we had to roll further away into long term expiration (bad trades in 2016 mostly against WYNN, LULU, and MNK which happened due to a mistake in our allowed trading calculations and I over-traded the account).

Our outlook for March income is however very conservative. I think, I will not be able to reach the goal income for March which is $1,717.35 dollars. I think we will be negative or around zero income in March. The reason is further unloading bad trades (WYNN) early in March and I do not plan on offsetting this loss. But we will see at the end of the month. There may be a good opportunity trade which I may take and offset all the loss.

Last thing I would like to add to this report is that I will posting our trades in this blog too. As of now, I was posting them in our Facebook group and to email subscribers only.

At the end I will then list a summary of those trades here in the report for your review. This will however happen in the March report.

 
What do you think about options trading?






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