Ticker Tape by TradingView
Weekly Newsletter   Challenge account   Weekly Newsletter   


Posted by Martin August 08, 2013
No Comments



 




Update to closed ARR put trade -10.56% loss

Update to closed ARR put trade -10.56% loss

I was so excited writing about my reasons why I no longer wanted to invest in ARR or trade its options that I forgot to mention how my trade went wrong. So this is an update to my previous post.

I closed this trade with -10.56% (loss) or -46.55% annual loss. On this trade I lost $158.33 total amount. It is not that bad when you compare it to my options income tracking chart on which it looks horrible, see below:

Options income

Click to enlarge

I track income or expenses as it arrives in the account. Today’s ARR put option buy back was a single expense of $729 to buy the puts back. This is not the loss! From this money an income of 571.22 dollars which I have received when I sold the puts must be deducted.

 




We all want to hear your opinion on the article above:
No Comments



Posted by Martin August 08, 2013
2 Comments



 




Trade exit – Armour Residential (ARR) put selling

Trade exit - Armour Residential (ARR) put selling

I decided to take a loss at my Armour residential put selling trade. Originally I believed in this stock, but lately I consider Armour residential a junk every dividend investor should avoid.

There is plenty of investor out there I could see who think this stock is a great value because of its book value (BV) is at around 5.43, it pays dividends (currently $0.07 a share) and who knows what else.

In the past I was buying this stock (you can see my trades in the ARR archive) and enjoyed dividends this stock was paying.

I even started selling puts to generate more income because I was OK to buy more shares in case of assignment.

But then situation changed.

ARR started cutting its dividends. In 2011 the company paid 0.11 a share monthly dividend. It kept on that level for some time, but then started cutting it. For a dividend investor this should be a reason to sell the stock. No exceptions, no reasoning, no discussion. Yet I was ignoring it and continued buying. I too was excusing myself, that mREIT is a different beast and all this can be temporary.

ARR

Then the management issued an SPO (secondary public offerings) to further damage investors. People out there will tell you that that is how mREITs work, how they get their money. Well, I would agree on that if the management wouldn’t wait for the stock price to climb from $6.5 a share up to $7 a share to issue SPO. Once SPO was out the stock plummeted back to $6.5 and never recovered.

Many out there were saying that this was ruthless step from the management ignoring shareholder and that they did this just to collect nice fees, which were tied to how much cash they were able to raise. Why would a management not care? It’s because ARR is managed externally by a private company Armour Residential LLC. Thus they are milking Armour Residential fund as much as they can. Their primary interest is their own company and their own beings. The fund is just a cow to them and they do not care that there were investors giving them money.

I still was OK with that. I still thought, that this was overreaction from the market and tough times in real estate and mortgage markets and this will be overcome over long period of time.

And then, short after SPO another dividend cut came. This time from 0.09 to 0.08 a share. I suffered one cuts from 0.12 down to 0.10, 0.09, and 0.08 during my holding period since March 2011 when I first bought this stock. that was enough even to my excuses and I sold.

Lucky enough, because then the stock plummeted after yet another dividend cut from 0.08 to 0.07. I sold at $6.5 a share and thanks to collected dividends I got out break even. Since then the stock trades at $4.45 a share as of this writing. A 50% loss!

I still got stuck with a short put in my account

To protect myself I decided to roll the put far away in time to avoid potential assignment into stock I no longer wanted. You can see my put trades in this archive.

I sold two puts as far in January 2014. My plan was to let time decay erode the puts as much as possible so I can buy puts back and get break even (at least) or smaller loss.

So why I decided to close this trade prematurely and take large loss?

ARR seems to be doomed and problems are piling. I was watching this stock briefly just to make sure everything went so-so that I could keep puts open. But today I saw that the CEO Jordan Zimmerman stepped down. That can be a good sign when you could see so many bad results this stock was presenting to investors. You could say that a new CEO would do a better job. But the following event convinced me that I didn’t want to have anything in common with this stock.

Arr received a delisting notice from NYSE. If the company doesn’t fix what NYSE has to say by August 12, 2013 (next Monday), it will become delinquent in compliance or to use the notice language “will be deemed non-compliant” or “below compliance” and can be delisted.

What can happen if the stock gets delisted? The stock will move to OTC market and I can get assigned prematurely. And that would be a step I definitely don’t want.

I wasn’t expecting being right all the time, and sometimes I will be taking a loss. This one was one of those trades.

Trade detail

I bought back ARR puts to close the trade:

08/08/2013 11:59:59 Bought 2 ARR Jan 18 2014 7.5 Put @ 3.6

At this point I hold no ARR trade and the ARR file is closed.




We all want to hear your opinion on the article above:
2 Comments



Posted by Martin August 06, 2013
2 Comments



 




Trade adjustment – Kinder Morgan Partnership (KMP) addition

Trade adjustment – Kinder Morgan Partnership (KMP) addition

Recently I was piling cash in my TD account waiting for an opportunity to buy dividend paying stocks. It wasn’t and it still isn’t easy to find a good dividend stock which would be priced at a value I would be willing to pay.

I saw many great stocks seeing running up and I was telling myself “Why I didn’t have more cash available when those stocks were lower and didn’t buy them?”

Kinder Morgan Partnership was one of the stocks which early this year got overly overpriced by investors rushing into nice yield paying stocks. Later the stock lost the momentum and started drifting lower. Currently the stock is showing loss, but it seems finding a support at the short term (1 year) trend line.

The picture below shows this price action. In January 2013 the stock sky rocketed and somewhat continued climbing higher just to peak at the end of April. Since then it continued downward.

See the green line indicating the short term support I spoke above. Two months ago the stock created the short term low and offered an entry opportunity. These days the stock re-tested this support and it seems the stock will bounce and continue higher.

KMP

Click to enlarge

Of course the trend continuation reversal may fail and the stock may continue drifting down. I do not think this will happen. So far the stock found its buyers at these levels and as the stock would drift lower the rising yield would attract more income seeking investors.

I don’t think the stock is in trouble. It recently increased increased its distribution rate or yield and it currently pays $1.32 per share quarterly, which translates to 6.38% yield. The company continues in acquisitions (recent Copano Energy transaction) and plans on increasing its exposure in Canadian market. As the US and Canadian energy production continues rising, Kinder Morgan will have great opportunities for further growth.

Contingency order to increase profit potential

From the long term perspective I consider this decline temporary and providing a great chance to add to my portfolio. To get into this stock I used my contingency order strategy.

I entered my first contingency order to buy 11 shares of KMP if the stock rises at 87.64 per share on June 22, 2013. As the stock continued drifting lower I was lowering my price entry target:

  • 07/25/2013 If the last of KMP is greater or equal to 87.26 Buy 10 KMP at limit $87.26
  • 07/26/2013 If the last of KMP is greater or equal to 86.77 Buy 11 KMP at limit $86.77
  • 07/29/2013 If the last of KMP is greater or equal to 86.77 Buy 11 KMP at limit $86.77
  • 07/30/2013 If the last of KMP is greater or equal to 84.93 Buy 11 KMP at limit $84.93
  • 07/31/2013 If the last of KMP is greater or equal to 83.96 Buy 11 KMP at limit $83.96
  • 08/02/2013 If the last of KMP is greater or equal to 83.66 Buy 11 KMP at limit $83.66
  • 08/06/2013 If the last of KMP is greater or equal to 83.00 Buy 11 KMP at limit $83.00

As you can see, lowering my entry target paid big time as I was able to enter into another position pretty cheap. This method of waiting for a good price AND a trend reversal at the same time is not 100% bulletproof. But as a long term investor I am not that much concerned if the stock fails continuing higher.

If this reversal is false and the stock turns lower, I would expect it to go as low as the long term trend (see the red trend line almost parallel to the green one representing 13 years long trend). If that happens I will be adding more shares of this stock into my portfolio.

Trade details

Today the order fired and I bought 11 shares of KMP:

08/06/2013 09:40:12 Bought 11 KMP @ 82.999

Stock details

Total shares held as of today: 33
Estimated annual dividend: $174.24
Consecutive Dividend Increase: 16 years
Dividend yield today: 6.38%
Dividend 5yr Growth: 7.43%
Dividend paid since: 1992

This trade increases my overall dividend income in TD Ameritrade account to $813.60 annually.




We all want to hear your opinion on the article above:
2 Comments



Posted by Guest August 06, 2013
No Comments



 




Save Up for a Cause

Save Up for a Cause
This is a guest post by Jeremias. He introduced himself.
My knowledge regarding stocks or investments I would say is quite on the average compared to people on the same age as I am, 15 years old. My parents introduced me to mutual funds when I was seven years old and I place money there on a yearly basis. I have quite saved a large amount of money ( for me), but I intend to use it at my senior years.
For me it is impressive, and I am happy, to meet a young man like Jeremias who is interested in saving and investing cash in such young age. I believe, if he continues educating himself in investing, he will be able to retire early. Very early.

 

Saving money is a very important term to remember in personal finance. Such action plays a very big role in building ones future. People save up to buy things or acquire the services they want in the future. It is very simple to save, even kids can; but the very people who often save are teenagers and adults. Everyone has a reason for saving money, what is yours?

On what purpose do people save? Why is it so important for us to save? There are three major reasons why people save. First, an individual wants or needs something so he/she saves up money to be able to buy it in the future. Second, a parent’s priority is to provide what the family needs. Lastly, people want to have a secure senior citizen life.

As part of our human nature, we have the feeling of wanting something. We have worldly desires. These things are those we buy to fulfil our desires. They should only be of secondary priority in life. We can live without them. On the other hand, we also have needs. These help us live. Without having them, we might already be dead. These are our basic needs like shelter, clothing, and food.

In life, people usually do not want to live alone, so eventually, they find a partner in life and have a family of their own. They become parents, but it is not simple being a parent or having a family of your own. Being a parent has its responsibilities. One has responsibilities to his/her partner, to the children, and to the family. Parents have to, of course, provide the needs of the family. This includes the basic needs to live (as stated above), and the children’s education. These are not the only needs of the family, there are a lot more and the parents have the responsibility to provide them.

Being a senior citizen is still difficult even at these times or in any country. Many are not provided with their needs. Some are not financially stable and do not get enough medical needs and attention. No one wants his/her children who already have their own families to worry about them too much. Some think they are a burden to the family and they do not want it. This happens because the pension other countries provide is not enough to help their senior citizens. So, for life to be easier when one reaches seniority, he/she must save up money for the future.

These are only some of the many possible reasons a person must save money. They save for the needs and wants of the person himself/herself, for the family, and for the senior citizen years of a person. The very solution to accomplish all this is to save money at an early age or as soon as possible. Everything is possible, you just have to work hard and wait for it.




We all want to hear your opinion on the article above:
No Comments



Posted by Martin August 04, 2013
2 Comments



 




My inspiration in the last week #31

My inspiration in the last week #31

I often browse the internet to find ideas about investing, trading stocks, options, investing opportunities and strategies. I like to read about investors and what their investing/trading approach to create income you can live on is.

 




We all want to hear your opinion on the article above:
2 Comments



Posted by Martin August 02, 2013
2 Comments



 




Credit Card Debt Solutions

Credit Card Debt Solutions

Credit card debt is something which is very easy to compile but it is relatively difficult to eliminate. Credit card debt is very different from home loan or mortgage payments where the creditors have at least a tangible asset to back up their money. This is the reason why credit card debt has become extremely concerning issue among both credit card holders as well as creditors these days. Credit card debt has been paralyzing many households across the world and if the issue is not handled with diligent mind then it can put your finances on roller coaster ride. If you really wish to get out of your miserable credit card debts then you should collect some reliable information about credit card debt solutions. Here are some useful tips on how to get out of credit card debts –

Self Help Tactics

If you don’t owe much of the amount then you can talk with your bank and shift the amount to your account with lower interest rate. This will help you to lower your monthly bills. This is one of the effective credit card debt solutions which you can use to lower your interest payments. If you are in a position of making your credit card payments but you think that the balance is going out of control then check the interest rates of all the credit cards and pay one which has high interest rate attached to it.

Manage your Credit Card transactions

Stop making any new purchases on your credit card. Paying in cash will make you aware of your spending habits and you will able to spend within budget rather than tempted by splurge. Most of the times, even a best deal turns out into a high value purchase by the time you pay several months of interest on it. If possible, try to make your credit card payments in early time instead of waiting till the final due date. This will help you to save significant amount of interest and lower the chances of incurring any excessive credit card debt.

Selection of perfect credit card solution

Customers searching for credit card debt solutions have diverse options from debt consolidation loan to balance transfer. They can even seek advice from any debt relief company if the debt is too high to resolve on their own. No matter what credit card debt solution you choose, it is extremely essential to check credentials of debt relief company you are planning to work with. If you are considering any debt settlement plan then consult a company which provides diverse credit card debt solutions and not just a conventional type of plan.

Balance Transfers

Most of the people opt to consolidate their all debts by transferring balances from several credit cards into one. This can be an effective strategy, but you have to be extra careful. Most of the credit card companies charge more than 4 % for balance transfers. Apart from this, many companies appear as they are strongly supporting credit debt relief and discount transfer fees during initial transfers. You can utilize the strategy of balance transfer to manage your debt effectively, but make sure you read all the terms and conditions properly.

Late Payments

Apart from varying interest rates as a part of introductory periods, you must be aware of changes in payment rates in case of late payment. In a particular month you will get so busy that you find yourself not meeting your payment deadlines. It may create very strong impact on your credit card payments. Most of the times, consumers find themselves in absolute financial jeopardy as their credit card interest rates get skyrocketed because of late payments.

Teaser Rates

You must be getting emails from several credit card companies offering you attractive interest rates on credit cards. Most of times, credit card companies promote loan plans by providing you higher interest rates which are also referred as ‘Teaser’ rates. That’s the reason why it is extremely essential for you to figure out what the annual percentage rate would be after your introductory period will get over. Credit card companies want to run their businesses in profitable way and though their attitude towards you is always helpful, you have to identify things important which they are not explaining you.

Debt Management Plan (DMP)

In Debt Management Plan, you can pay affordable monthly payment to DMP provider in order to cover your credit cards. The DMP provider does some negotiation with credit card company on behalf of you and distributes payment in appropriate proportion. The single monthly payment makes easier for consumer to manage his debts in effective way. Some other benefits of DMP include reduced late fees, lower interest rates and less time consuming process to manage your credit card debts.

Debt Settlement Plan (DSP)

In Debt Settlement Plan, you have to make monthly payment which you can afford to DSP provider. The amount will be held in escrow when they negotiate a modified settlement amount with credit card companies. Once an agreement has been made, the funds will be released from your escrow account and you have to pay only certain portion of your overall debts. However, one important thing a credit card holder must understand that DSP may create a negative influence on his credit as compared to DMP.

Conclusion

Credit card can be a great convenience for anyone but most of the people end up incurring too much of debt on it as they fail to utilize it in effective way. Getting out of credit card debt is not as easy as getting into it, but it can be achieved through proper planning. There is no magic wand which can resolve your credit card debts overnight. But with consistent efforts, you can definitely set yourself on a way to achieve safer financial future. By taking into consideration above mentioned tactics, you can definitely manage your credit debts in effective way. Above mentioned credit card debt solutions have produced successful results for many credit card holders and you can also utilize these tactics to live comfortable and debt-free life.




We all want to hear your opinion on the article above:
2 Comments



Posted by Martin August 01, 2013
No Comments



 




Trade exit – Pitney Bowes Inc. (PBI) put selling – 1.07% gain

Trade exit – Pitney Bowes Inc. (PBI) put selling - 1.07% gain

I was no longer comfortable with Pitney Bowes (PBI) stock and thus earlier I changed my mind on this trade. Originally, I was OK to hold this stock in my portfolio in case I get assigned, but after 50% dividend cut the rules changed.

For this reason I decided to take advantage of Pitney’s somewhat good results which boosted the stock up and close my put selling position. I think this boost of the price may have a short life and I bought back the put contract:

08/01/2013 10:56:55 Bought 1 PBI Jan 18 2014 12.0 Put @ 0.3

This closes the trade with 1.07% gain after commissions (with $12.88 cash gain) or 2.80% annualized gain. It could have been better, but I wasn’t willing to hold my maintenance cash tied to this stock. Well, still better than a loss.




We all want to hear your opinion on the article above:
No Comments



Posted by Martin July 31, 2013
4 Comments



 




Dividend investing boost with Scottrade


ScottradeWhen I read about Flexible Dividend Reinvestment tool on Dividend Growth Machine blog being adopted by Scottrade, I thought that this was a great idea. Yesterday, I looked at my Scottrade account and found a link to this program already available and I decided to give it a shot.

If you have an account with Scottrade or plan on opening one, I recommend you to give it a consideration.

The program’s benefits

The program is similar to a classical DRIP program which is provided by many brokers, but there is one significant difference. A typical DRIP system normally takes all dividend income from a stock which generated the dividend and invests it back to the same stock.

The Scottrade’s program takes a different approach. It allows you to include all your eligible stocks, include them into a program and use their dividends to accumulate other stock holding, a different one from those which generated the income.

Here is an example:

Currently I hold only three stocks in my Scottrade account: AGNC, FGP, and PSEC. I could include all three stocks into the program and use the dividends these stocks generate to be reinvested into only one stock. In my account it is PSEC. So as AGNC, FGP and even PSEC pay the dividends, all those dividends will be used to purchase my PSEC holdings.

Once I accumulate enough of PSEC, I can change the distribution of the dividends to another stock, for example AGNC. Or I can distribute dividends equally into all of my holdings. In my example, 33% will go to purchase AGNC, 33% to purchase FGP and 34% to purchase PSEC.

You can play with the distribution as you need and change it any time should your priorities change. You can also select a monthly or quarterly frequency of reinvesting.

See the picture below how such distribution looks like:

Scottrade FDRIP

Click to enlarge

On the picture above you can see in the “Program settings” that I have chosen all three stocks to contribute towards the Flexible Reinvestment Program, but then I elected that 100% of accumulated dividends will be invested in PSEC. At the bottom I chose Quarterly reinvestment frequency. At the end of October the dividends are planned to be reinvested into PSEC. I will not have enough saved in the program however, there fore this investment will skip.

I found the program quite appealing to me for this reason, that if you have a small account, you can use a power of all your dividends to purchase more shares of one stock. It is a great boost and the holding growth of your portfolio will be faster.

What’s not so good?

There is one thing which makes the program slightly inefficient. The typical DRIP will allow you purchasing fractions of your stock. Scottrade’s program doesn’t allow it. It will accumulate the dividends as long as you have enough cash in the account to purchase at least one share.

In my example I elected PSEC to be bought using this program because PSEC currently trades at around $11 a share. Thus every quarter I will be able to purchase at least 3 stocks (my current quarterly dividend income is at around 36 dollars). AGNC or FGP at their current prices would allow me only 1 share every quarter. With PSEC, the holding growth would be faster.

Although waiting for accumulating enough cash may look like a negative thing, it still is minor to me to kill the entire program.

And what is absolutely best?

The best thing with the Flexible Dividend Reinvestment tool is that the program is absolutely free and reinvesting will cost you nothing. I would say, that this program is a very valid and appealing and I must say: Scottrade – bravo!




We all want to hear your opinion on the article above:
4 Comments



Posted by Guest July 30, 2013
2 Comments



 




Diversify Your Investment

Diversify Your Investment
This is a guest post by Jeremias. He introduced himself.
My knowledge regarding stocks or investments I would say is quite on the average compared to people on the same age as I am, 15 years old. My parents introduced me to mutual funds when I was seven years old and I place money there on a yearly basis. I have quite saved a large amount of money ( for me), but I intend to use it at my senior years.
For me it is impressive, and I am happy, to meet a young man like Jeremias who is interested in saving and investing cash in such young age. I believe, if he continues educating himself in investing, he will be able to retire early. Very early.

 

My mother always reminds me on decision-makings that I always have a choice. That is absolutely true. In any situation you are in, you always have a choice. So, in relation to investments, you also have other options of investment. Investment does not only circulate on stocks and mutual funds. There are other ways and some of them may be in the form of material things. Some good examples would be land properties, vehicles, and computers.

Acquiring land properties is the best option if one wishes to diversify in investments. Aside from the fact that one can earn money from them, they never diminish even if it takes eternity. Of course, this is true as long as the landowner pays his/her taxes for ownership. The greatest thing with land ownership is that through time, the property’s value increases. This is due to the high development of the surrounding areas. Therefore, by the time the owner sells his/her property, its value is a lot higher compared to when he/she bought the property. In addition, the owner may develop his/her property buy building something and have it rented by other people. This way, the owner has secure money on his/her pocket on a regular basis. Places to stay are highly in demand nowadays since the human population increases rapidly. Moreover, people have increased their entrepreneurship skills, thus, many are interested on having a store. A landowner may offer his/her property to become a store stall for rent.

Development of land properties are among the common options great investors put their money on. This is also known as real estate. Development companies buy vast land, improve the area, and transform it into subdivisions, condominiums, or parks with stores around. Then they sell the lots alone or with houses on it to individuals who look for a place to stay on subdivisions. This also applies to condominiums. Parks with store stalls around them are ideal places for business. It is a good leisure place for people, at the same time, the entrepreneurs who rents the stalls earn money.

Vehicles may also be an option for investment. A person may buy many vehicles and have it rented by people. It could be turned into a taxi business or a school service business. This is ideal because transportation has a major role in people’s everyday lives. Another good renting business is on computers. Almost everybody communicates to the world through computers. The same concept with vehicles may be applied to computers. People rent the use of a unit and pay for the number of hours they used it.

These are only some of the possible options for investment. There are still lots of them waiting to be unraveled and explored. Even the little things one sees is a possible option for investment. One only needs to visualize and think of different possibilities. Always remember that great things have small beginnings.




We all want to hear your opinion on the article above:
2 Comments



Posted by Martin July 29, 2013
No Comments



 




New Trade – Realty Income Inc (O) covered call

New Trade - Realty Income Inc (O) covered call

I decided to take a partial return covered call trade on Realty Income stock I already hold in my portfolio. If you follow my blog for some time, you may know that I distinguish between the two covered call trades: a total return and partial return.

Total Return Covered Call

The total return covered call is a trade also called “buy-write” where you buy a stock (usually 100 shares or multiples of 100) and at the same time you sell a call option contract. Your expectation is to get called away at expiration and collect a defined gain on the stock plus premium. You have a gain on the stock and on the option contract.

Partial Return Covered Call

On the other hand, the partial return covered call is a contract, where you sell a covered call against a position you already hold in your account to generate income. Your goal is to collect premium only and keep the stock at expiration. Thus you do not want your stock to be called away at expiration.

This is why I like selling total return covered calls over partial returns because I do not want my core portfolio holdings to be called away.

However, I wanted to give it a try and see the outcome.

Realty Income Partial Return Covered Call

Today, I sold 1 covered call contract against the my core holding and there will be three outcomes:

  1. The stock ends below the strike price of the option at expiration and the option will expire worthless.
    If that happens, I will keep the stock and consider selling another covered call contract.
  2. The stock ends up above the strike price and option will get exercised at expiration.
    If that happens, I will either roll the covered call higher and further away in time, close the contract, or let the stock being assigned and immediately repurchase it back.
  3. I can get early assignment and the stock gets called away prior to expiration.
    This typically happens when options get In-the-Money (ITM) or deep in the money and the premium cost to buy the contract back is lower than the dividend payout. In this particular trade the premium is worth almost 9 times more than the dividend payout, so early assignment is very unlikely. If that however happens, I will lose the dividend, but overall gain would be significantly higher so I can immediately repurchase the stock and still make good money.

And here is the trade details:

07/29/2013 14:30:51 Sold 1 O Aug 17 2013 45.0 Call @ 0.41

If the stock stays flat and the option expires worthless I’ll keep the premium and realize 0.7% gain or 13.21% annualized gain.
If I get called away I will realize 8% return ($331.21 net gain) or 374.5% annualized return.

How do you trade covered calls? Do you trade them at all? If you trade covered calls, do you trade them against stocks you already own or do you trade buy-write, total return trades?

 




We all want to hear your opinion on the article above:
No Comments



Page 135 of 203« First...110120130«133134135136137»140150160...Last »


This site has been fine-tuned by 14 WordPress Tweaks