Weekly Newsletter   Challenge account


2021 Week 16 investing and trading report

April is heading to its end and I am providing my weekly investing and trading report to show how our account grew last week, what trades we took and where we are in accomplishing our goals. April was slow trading stock options and our income for the whole month appears to be low and below average. But I do not expect every month to be a heyday. Last week, we focused on managing the existing trades, opened a few new ones, but mostly continued accumulating dividend stocks. We also significantly increased cash reserves.

 

Here is our investing and trading report:

 

Account Value: $53,437.38 +$6,185.87 +13.09%
Options trading results
Options Premiums Received: $810.00    
01 January 2021 Options: $4,209.00 +16.65%  
02 February 2021 Options: $4,884.00 +15.41%  
03 March 2021 Options: $5,258.00 +12.79%  
04 April 2021 Options: $2,252.00 +4.21%  
Options Premiums YTD: $16,603.00 +31.07%  
Dividend income results
Dividends Received: $9.50    
01 January 2021 Dividends: $53.04    
02 February 2021 Dividends: $63.00    
03 March 2021 Dividends: $30.31    
04 April 2021 Dividends: $60.02    
Dividends YTD: $206.37    
Portfolio metrics
Portfolio Yield: 4.00%    
Portfolio Dividend Growth: 7.47%    
Ann. Div Income & YOC in 10 yrs: $8,658.28 13.65%  
Ann. Div Income & YOC in 20 yrs: $53,311.28 84.05%  
Ann. Div Income & YOC in 25 yrs: $187,163.95 295.09%  
Ann. Div Income & YOC in 30 yrs: $926,263.52 1,460.36%  
Portfolio Alpha: 23.06%    
Portfolio Weighted Beta: 0.78    
CAGR: 816.54%    
AROC: 24.05%    
TROC: 21.29%    
Our 2021 Goal
2021 Dividend Goal: $1,071.42 19.26%  
2021 Portfolio Value Goal: $42,344.06 126.20% Accomplished

 

We continued accumulating dividend growth stocks to achieve our dividend weekly dividend income. We accumulated shares in ABBV, OMF, T, and TSN. Our non-adjusted stock holdings market value increased from $47,486.85 to $68,258.17. We parked available cash in the ICSH fund which we use as cash reserves. The fund holds value during volatile markets and it pays a dividend. It used to pay 1.90% but lately, the yield dropped to 1.09%. Still, a better deal compared to high yield savings accounts that pay 0.60% only. We keep the cash in the ICSH fund as a reserve and sell shares only if we need to release buying power to cover a trade (or a margin call). On the other hand, having free cash tied in the fund prevents me from using it and over-trading. That was my biggest sin in the past. Also, money in the fund makes the cash to make some small money receiving dividends rather than just sitting in the account making nothing.

 
Stock holdings week 16
 

Last week, we adjusted a few trades such as AT&T (T) strangle where the call side got in the money and AT&T is difficult to roll, so we didn’t want the trade to run away from us. We received $810.00 in premiums trading options against our holdings. For the entire April 2021, we received $2,252.00 premiums, and all our income was parked in ICSH reserves. This income is low and I expect April to be low on income. But, evidently, it is good at growth.
 

Open trades

 
Investing and trading report
 

The table above shows all our open trades and expirations. It is just a simplified tracking and buying power reduction. Our goal is to trade a set amount of equity strangles in what I call perpetual strangle trading. It is nothing fancy. I just have a list of equities I like to trade options around them, I like to eventually own and I accumulate these stocks. Once a trade expires (or nears expiration) I re-open the trade or roll it into the next expiration (mostly trades that a stock is near the short strike and there is a risk of getting in the money).

We did open a few new trades last week. The BP reduction increased from $33,294.50 to $44,388.11, a BP usage increased by $11,093.61 (+33.32%). This represents 167.00% of margin usage.

 

Investing and trading ROI

 

Our options trading delivered a 4.21% monthly ROI, totaling a 31.07% ROI.

Our account grew by 159.75% this year.
 

Our options trading averaged $4,150.75 per month this year. If this trend continues, we are on track to make $49,809.00 trading options in 2021.
 

We are still on track to complete goals in our portfolio. We made slight adjustments and we are providing our comments to our goals and tasks we set up in the week 6 report:
 

Old SPX trades repair

 

This week we have not done any adjustments to our old SPX trades. We are still sitting on those trades and waiting for the untouched side to close so we can roll the trades again. The goal will be to roll the trades until we will be able to close them for at least break even and release the buying power. We will keep doing this only if the resulting trade will be a credit trade or a very small debit. If adjusting these trades would require adding more new money, we would rather close these trades and move on.

 

Accumulating Growth Stocks

 

Last week, we didn’t add any growth stocks to our portfolio. We still plan on adding SNOW when it is trading this low and we are planning on accumulating Tesla (TSLA). But Tesla keeps moving higher and I am waiting for it to drop to add more shares. We keep selling Iron Condors or vertical spreads to receive premiums and lower our cost basis.

 

Accumulating Dividend Growth Stocks

 

Our primary goal, and strategy, is to accumulate high-quality dividend growth stocks. We continued accumulating the following dividend stocks and as of today hold the following shares:
 

We finished accumulating Realty Income (100) and continued adding: ABBV (34), OMF (50), AT&T (150), and TSN (10).
 

Our goal is to not only reach 100 shares of high-quality dividend stocks. We also want to build a weekly dividend income as per this calendar:
 

Weekly dividends income calendar
 

We are reaching our weekly dividend income goal as almost all weeks are filled with dividend income.

 

Market Outlook

 

The market reached our price target at the $4,200 level almost perfectly. Technical analysis is not an exact science and the targets or levels are approximate. So it is quite amazing to see that the market landed at our target exactly and then stalled.

nbsp;
SPX April 24 2021 outlook
 

The market is now entering a consolidation base consolidating sharp gains. That is a good sign. That helps with the trend continuation. This pattern can be also interpreted as a “flag” or “pennant” pattern. Both are bullish continuation patterns if cleared successfully. If the market breaks to the upside, expect bullish trend continuation, and the next price target would be around $4,440 level. If we do not clear this pattern and it falls, expect a pullback to $4,100 or even back to the $4,000 level. But, we must wait to see what the market wants to do next.

 

Trading options

 

We continue trading options around the stocks we own or plan to own in the future. I call it monetizing our positions. If you look at our holdings table below, there are two column sections. The right section is “Options adjusted”. That section applies options premiums to the cost basis of our stocks. And there you can see how beneficial it is. It will make a significant difference when the market is falling yet our stocks will still be in green.

 

Investing and trading report in charts

 

TW Account Net-Liq week 16
 

It is amazing to see how the portfolio growth is speeding up once it grows larger. We are almost at $2,000 net-liq gains per week. If I extrapolate this rate of change to the remaining 37 weeks this account should grow by another staggering $74,000, finishing the year 2021 at $121,250.

 
TW Account holdings week 16
 

The table above shows our current holdings and gains on those holdings. Adjusted columns indicate how options help to boost (or ruin) our stock holdings appreciation, or in other words, lowering the cost basis. Without options, our holdings would be up 7.62%. With options, our holdings are up 13.15% (from inception on 4/1/2019). The SPX is up 44.51% since inception. Since the inception of our portfolio, our stock holdings underperform the overall market (up only 13.15% on a cumulative basis). This week, our adjusted stock holdings underperformed the market. The market gained 14.66% YTD, our portfolio options-adjusted stock holdings grew by 6.17% YTD. This includes stock holdings adjusted by options trading, not the entire account. If we include the entire portfolio and options trading, we beat the market significantly (up 159.75%).
 

TW Account holdings Growth YTD
 

The stock holdings growth slowed down because we added many new stock positions and these positions didn’t have time to grow yet, so I expect the growth trend to improve over time and beat the market.

 
TW Options Income week 16
 

TW Options Annual Income week 16
 

 

Our dividend goal and future dividends

 

TW Received vs Projected Dividends week 16
 

Our portfolio still doesn’t represent the true dividend income potential. The $1,071 of dividend income is our goal based on the expected stock accumulation. The chart below indicates the dividend income of currently accumulated stocks. But as of now, we are not yet receiving this income as we just finished accumulating these stocks and since the companies pay quarterly, we already missed the 1st quarter.
 

TW Received vs Future Dividends week 16

 

Our account cumulative return

 

This is another metric I started tracking (since March 13, 2021) recently.
 

TW cumulative return wk 16
 

As of today, our account cumulative return is 23.54% (since March 13, 2021).

 

Conclusion of our investing and trading report

 

This week our options trading was great and we created a lot of income making March our best month so far.

We will continue accumulating the dividend growth stocks in our portfolio to reach 100 shares. We will also replenish our cash reserves to bring them back to 25% of our current net-liq value.

We will report our next week’s results next Saturday. Until then, good luck and good trading!





2 responses to “2021 Week 16 investing and trading report”

  1. vale says:

    Are you really selling naked strangles with 150% of your margin or did I interpret this all wrong?

    • Martin says:

      I am not sure yet myself what that number is :D
      I don\’t think it is the margin on its own, although it may be. With RegT margin, you can trade 2:1, so I can technically go to 200% and still be safe. At least, that\’s what I think.

      This number comes from the Tasty Works account and they call it BP usage (buying power usage). I asked them what that number represents and where is a cap which would mean I get into trouble if I reach or exceed it. Their response was somewhat confusing. They say it is a usage of buying power to Net-liq ratio, so if my net-liq increases, this number drops although my usage doesn\’t change. So I am still trying to figure out how to use that number. If I find it worthless, I will drop it from my reviews.

      And, no, I am not completely naked, some strangles are covered. Some are covered on the call side, some are covered on both sides, although very few are covered.

      Thanks for stopping by.

Leave a Reply

Your email address will not be published. Required fields are marked *