Weekly Newsletter   Challenge account


Posted by Martin June 05, 2021
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Dividend Growth Stocks to Accumulate in June 2021


Our primary goal is to accumulate dividend growth stocks and create a strong, safe, and large passive income. Our secondary goal is to trade options around those stocks to generate additional income and reinvest that income to accumulate even more dividend growth stocks.

To find a proper strategy that would get me to my goal, I needed to answer a simple question: How to invest to achieve my goal? How to achieve a large enough income that can buy more stocks that would generate even more income? The answer was dividend growth stocks.

I was not satisfied with just dividends. An income from dividends is small and grows slowly. At least, at the beginning of the accumulation phase. So, I added an options strategy to generate even more income selling options and collecting premiums. But I wanted more. So, I started looking for speculative but safe high-yielding dividend stocks (mostly ETFs and closed-end funds “CEF”). Unlike the dividend growth stocks, these stocks can be bought and sold out from our portfolio. The dividend growth stocks are the only stocks we plan to hold forever (unless they cut the dividend due to insufficient earnings or free cash flow).
 

Dividend growth stocks to accumulate in June 2021

 

June 2021 dividend growth stocks

 

Do your own due diligence if you decide to invest in these stocks. The information here is believed to be accurate but may have changed since publishing.
 

We will hold these stocks forever. We will sell them only when they no longer meet our dividend investing criteria (for example the company cuts the dividend) or the stock significantly underperform and better opportunities present themselves. If these companies keep paying dividends and increasing them, we will hold.

We will also sell options around these positions to offset our cost basis. During selloffs and recoveries, we may also buy call options to capture the recovery. If you are interested to see what we are buying and what options we are selling/buying, subscribe to our program.
 
 




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Posted by Martin June 05, 2021
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2021 Week 22 investing and trading report


Our first week in June 2021 started slowly as we generated $389.00 options income and $59.67 dividend income only. But this week was short and the market sassy, so we waited for it to calm down and show us what it wanted to do. We are again providing you with our investing and trading report so you can see how we are doing investing in stocks and trading options around our positions. We want to be transparent with our trades so you can decide to join our $100 account challenge program.
 

Our $100 account challenge

 
We started our $100 account challenge last week. We opened a new account with our broker, deposited the initial $100 cash and June $100 additional cash. We are now ready to start building our first position and grow this account from $100 to $75,000 in ten years or sooner. You can join this program and grow your account with us mirroring the trades, ask questions, and hopefully learn and develop enthusiasm investing in the stock market. We will be investors in the first place, buying dividend growth stocks and monetizing these positions selling options, and grow a small account.
 

 

Join us on this journey by subscribing to our program and follow us and see how I did it when I decided to grow a small account to a large one so later you can start trading naked strangles against stocks like AAPL, BABA, ABBV, or BA and have enough capital to do so. We started with a $100.00 initial deposit and we will be depositing $100 every month from now on and grow this account. And we are starting next week!
 

The subscription will cost $15.00 a month. After the initial $15.00 you will get one month free. I can assure you that after a certain time of investing and trading with us, you will be generating income larger than the cost of this program.

 

Let’s go and review this week’s investing and trading.

 

Here is our investing and trading report:

 

Account Value: $70,502.17 +$1,660.31 +2.41%
Options trading results
Options Premiums Received: $389.00    
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: $2,336.00 +4.30%  
05 May 2021 Options: $6,346.00 +9.22%  
05 June 2021 Options: $389.00 +0.55%  
Options Premiums YTD: $23,422.00 +33.22%  
Dividend income results
Dividends Received: $59.67    
01 January 2021 Dividends: $53.04    
02 February 2021 Dividends: $63.00    
03 March 2021 Dividends: $30.31    
04 April 2021 Dividends: $139.70    
05 May 2021 Dividends: $167.45    
06 June 2021 Dividends: $139.70    
Dividends YTD: $554.65    
Portfolio metrics
Portfolio Yield: 4.68%    
Portfolio Dividend Growth: 8.47%    
Ann. Div Income & YOC in 10 yrs: $13,789.13 19.62%  
Ann. Div Income & YOC in 20 yrs: $132,158.60 188.03%  
Ann. Div Income & YOC in 25 yrs: $685,168.47 974.84%  
Ann. Div Income & YOC in 30 yrs: $5,982,376.69 8,630.85%  
Portfolio Alpha: 24.59%    
Portfolio Weighted Beta: 0.85    
CAGR: 825.95%    
AROC: 33.54%    
TROC: 24.16%    
Our 2021 Goal
2021 Dividend Goal: $1,071.42 51.77%  
2021 Portfolio Value Goal: $42,344.06 166.50% Accomplished

 

Dividend Investing and Trading Report

 
Last week, we have received a $59.67 in dividends income. We feel that the income will be growing faster as more of our holdings mature and become eligible for dividend payouts.

The chart below indicates our current annual dividend payout from our dividend stock holdings. A dividend growth investor needs to be aware of this payout from each stock. The chart indicates that some stocks contribute (or will be contributing to our income with large sums while others contribute very little. That can be a problem. If a company that contributes with large dividends suddenly cuts the dividend, it will have a very significant impact on our income (for example, if OMF cuts the dividend, or suspends it, the impact on our portfolio dividend income will be significant.

I am OK with this imbalance during the accumulation phase but plan to address it in the next phase of cultivating our portfolio. In other words, in the next phase, I will be accumulating stocks with lesser payout to match the stocks that pay more in dividends. If a company cuts the dividend, the impact of a lost income will be mitigated.

Last week, our dividend income reached 51.77% of our dividend income goal.

 
Annual Dividend Payout week 22
 

Options Investing and Trading Report

 
Last week we didn’t trade much. We rolled a few trades that got in trouble, such as OXY, BNGO, BA, and AAPL. We also re-opened a few new trades that expired a week ago. We opened a new strangle against DKNG, and OXY. Other than that, we have not done much trading last week.

The new trades and adjustments delivered $389.00 options premiums last week.

You can watch all our trades in this spreadsheet and you can also subscribe to our newsletter for our trade alerts.
 

Investing and Trading Newsletter

 
We started (or better say re-started) our free newsletter. We will send to our subscribers a notification of our new trades when we open them, when we adjust them, and when we close them or let them expire. The newsletter will also explain the trade and our expectations. As of now, it is free but it will not be free forever. But all existing subscribers will be grandfathered and receiving the emails for free.

 

Expected Future Dividend Income

 
As the table at the beginning of this report indicates, our aggressive dividend growth stocks accumulation is starting to show significant progress in our future dividends income. Our portfolio dividend yield and dividend growth will be bringing us almost $131,682.37 in 20 years and $5,941,988.95 in 30 years. We will keep aggressively accumulating dividend growth stocks to generate liveable income sooner than in 20 years. And the portfolio is starting to show this to be happening.
 

Market value of our holdings

 
Our non-adjusted stock holdings market value increased from $74,857.07 to $75,289.49. We did not add any new positions last week.

 
Stock holdings week 22
 
Our goal is to accumulate 100 shares of each stock of our interest and we are getting to that goal. However, as mentioned above, this harms our dividend payout and portfolio growth. Although, it is temporary. Therefore, once we reach this goal (which we set because of the ability to trade covered calls), we will start accumulating these shares to equalize our dividend income rather than have an equal amount of shares.
 

Investing and trading ROI

 

Our options trading delivered a 0.55% monthly ROI in May 2021, totaling a 33.22% ROI YTD.

Our account grew by 242.70% this year.
 

Our options trading averaged $3,903.67 per month this year. If this trend continues, we are on track to make $46,844.00 trading options in 2021.
 

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 did not add any new growth stock positions to our portfolio. We may do so next week but I decided to take a breather from the aggressive accumulating of anything in our portfolio. I feel like I am stretching it too much and it makes me nervous. So I may take a break this month and just maintain the portoflio as is.

 

Accumulating Dividend Growth Stocks

 

Last week, we did and any new dividend growth stock positions to our portfolio.

Our goal is to reach 100 shares of high-quality dividend stocks and build a weekly dividend income as per this calendar, but we have made no changes to this goal last week:
 

Weekly dividends income calendar
 
You can see the entire spreadsheet here.

 

Market Outlook

 

The market continued its sideways bound trading when optimism was replaced with inflation fears just to dismiss them later upon job report. Tech stocks continue struggling and the entire market seems to be consolidating. And that is good.

 

55% probability of going up

 

It is hard to say where we will go from here. It can be down as well as up. No one knows. We have to wait for more clues to find out. As of now, we are in a range and we have to wait. The market is slightly skewed to the upside but it can all change on a dime the very next day.

 
SPX June 5 2021 outlook
 

I still expect the stock market will most likely push to the $4,300 – $4,400 level (second half of July 2021) and then we may see some serious correction (15% to 25%) before the market resumes its uptrend. We are still in a very strong secular bull market, so do not expect any catastrophe or doomsday as talking heads and Perma-bears start crawling out of their holes. But that is just pure speculation.

 

Investing and trading report in charts

 

Account Net-Liq

 

TW Account Net-Liq week 22

 

Account Stocks holding

 
TW Account holdings week 22
 

Or stock holdings still do not beat the market. However, I expect it to change over time. S&P 500 grew 46.22% since we opened our portfolio while our portfolio grew 16.03% only. On YTD basis, the S&P 500 grew 16.38% and our portfolio 9.05%.
 

Account Growth YTD

 
TW Account holdings Growth YTD
 

I expect our stock holdings to start outperforming the market as they mature. However, these are just our stock holdings. The entire portfolio beats the market by far thanks to monetizing those positions.

We consider our stocks our property, like real estate. We buy them to collect “rent” from those properties. We receive dividends, and we also receive premiums from options. We are building assets that we can monetize, generate income, and reinvest that income to buy more assets.

Our goal is to grow this account to $1,000,000.00 value in ten years. We are in year two.

And you can follow us in our journey growing our portfolio from $100 initial deposit to $75,000 in ten years (and maybe faster as I could grow this portfolio from approx. $2,000 to $70,000 in two years! Join us and subscribe to our $100 account challenge!
 

 

Investing and Trading Report – Options Monthly Income

 
TW Options Income week 22
 

Investing and Trading Report – Options Annual Income

 

TW Options Annual Income week 22
 

Our dividend goal and future dividends

 

TW Received vs Projected Dividends week 22
 

We are on track to accomplish our dividend income goal, currently, we are at 51.77% of the goal to reach $1,071 of dividend income this year.

However, the chart below indicates that our dividend income will possibly exceed this goal as we accumulated enough shares to receive $3,347.42 in dividends.
 

TW Received vs Future Dividends week 22

 

Our account cumulative return

 

The chart below indicates our cumulative adjusted return. It shows how the last week’s selloff shook down our returns but we are recovering along with the market.
 

TW cumulative return wk 22
 

As of today, our account cumulative return is 23.71% (since March 13, 2021).

 

Conclusion of our investing and trading report

 

This week our options trading exceeded our expectations. I hope, the rest of the month will be even better.

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!




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Posted by Martin June 01, 2021
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Turn $100 in $75,000 in ten years challenge


If you have a small account and wish to grow your account faster than just buying stocks and holding them I started a paid service (in fact a challenge) where I will show you how I did it myself.

Investing and trading is a process and it can be done even though the system is rigged against you if you trade very little money. Fees, regulations, restrictions, all are aimed against a small guy like you or me. So you have to be careful what to trade and how to trade it. Unfortunately, it is a slow process. Do not expect a quick-rich scheme.

During my options trading career, I made a lot of money but I also lost them. Until I finally gave up and started trading options the safe way. I wanted to grow my account fast trading strategies for which I didn’t have enough capital or they were too volatile (like 0 DTE SPX Iron Condors). Yes, these strategies worked and doubled my account fast. I made money in a week or two. I turned $4,000 account into a $20,000 account in two weeks. But guess what happened next? I lost it all in a week!

I returned back to what I was learning in 2010 – 2014 and it works well. It is not a high-flying get rich trading. So, if you are looking for something to make you a million soon, this program is not for you.

 

Challenge

 

I started re-building my account and trading what I learned many years ago. And I started trading from scratch (after I lost my account again). So I was trading a small account myself. And guess what? My account was actually growing faster than when I was trading my zig-zag risky trades. In the beginning, the process was slow and painful, but it worked and my account started growing faster.

And as my account started growing I could trade larger trades, like strangles against stocks like AAPL, or BA. And that was when people started asking me if I can post small trades because they could no longer afford to trade what I was trading myself. And that brings this challenge.

I opened a new account, I will deposit $100 on it as the initial amount and then add $100 dollars monthly to the account. I will trade it and grow it to $75,000 in a conservative way. If you want, you can subscribe to this challenge and do exactly the same trades that I do and grow your account with me.
 

 

Strategy

 

In this program, we are investors in the first place. I firmly believe that if you want to be a successful trader, you must be an investor. In my opinion, retail investors want to be traders first but screw up and become involuntary investors later on. Usually ending up in a trade they didn’t want as an investment in the first place.

You want to be an investor and have an investor’s mindset first and then trade around your investments.

I had it backward myself too. I wanted to be a trader but ended up trading instruments I didn’t want, hated, or couldn’t afford to have as investments. And I lost money.

Do not repeat the same mistake. Look at your trades as investments first. Trade only instruments you want to own.

In this program we will be doing the following:
 

  1. Buying and accumulating dividend stocks.
  2.  

  3. Buying and accumulating growth stocks.
  4.  

  5. Trade options strategies to generate income around those stocks (monetizing our positions).
  6.  

  7. Reinvest all proceeds until we reach the goal.

 

Who is this program for?

 

This program is for investors who want to create wealth and generate income that would eventually replace your salary and you become financially independent but who have little money to invest. Our strategies can boost this process.

But this program is in no way a quick-rich scheme.

If you are looking for high-flying stocks to gamble your money like the meme stocks we experienced recently or trade instruments for which you are undercapitalized to get rich fast, or you are looking for some adrenalin and excitement then this program is not for you.

In this program, you will need:
 

  1. Discipline
  2. Execute the plan diligently, month after month, in a boring way.
     

  3. Patience
  4. Be patient when growing your account. It can be frustrating to sit on a small account and waiting for it to move. At first, it will be a painstakingly slow process. But eventually, it will start speeding up.
     

  5. Stay calm
  6. One of the benefits of having an investor’s mindset is that it will allow you to stay calm and not panic when everyone else is panicking. And there will be a lot of opportunities to panic.

 

Benchmark

 

We didn’t come with the $75,000 goal pulling that number out of a hat. I have been trading options since 2010, and although I was not always posting all my trades and results on social media, I was still recording my trades and thus have substantial data about various strategies I took. I can use these numbers now to calculate any proceeds and expectations. Of course, past performance is not a guarantee of the future outcome, but it gives a glimpse.

By trading a strategy which we will present in this program, you can expect an annual return between 30% to 45% on your investments. That is trading options only. You can add dividends on top of this cake.

If we take the initial investment, monthly deposits, and expected return of 36% (my current return) and plug it into a compounding calculator, and compound it annually, we get a $70,986.56 account balance. And this is our benchmark for this program. Will we be able to achieve this goal? Well, time will show.

 
Challenge
 

Subscribe

 

If this sounds good to you, subscribe to this program. It will cost $15 per month only and you can cancel anytime if you do not like it. The initial cost is $15.00 after which you will get one month free. Then the cost will be $15.00 monthly. I can assure you that you will make this monthly fee back every month with just one single trade.
 

 




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Posted by Martin May 29, 2021
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2021 Week 21 investing and trading report


May 2021 is over and we can book it in our investing and trading report as history. It is amazing how fast this month passed. As expected, this month was our best month ever. We are closing our May 2021 options trading books with $6,346.00 income. I am happy with the results.
 

Announcement

 
The results and our trades are now relatively large and they require large capital to trade. Many of our trades are now demanding $3,000 to $4,000 of margin to trade them. That makes following our trades impractical for investors with small accounts. I had a few investors contacting me and asking me how can they trade those trades we post in our newsletter with their small accounts. I remember that I was in that same boat myself once.
 

Therefore, I decided to create a separate subscription showing how to grow a $100 account into $75,000 in 10 years (be conservative and realistic) starting with $100 and depositing $100 every month.
 

But this subscription will not be free. We plan to charge $15.00 a month to pay for the blog updates and plugins (that, unfortunately, are not free either; it can be more if we achieve the same or similar results as in this portfolio). Then we will guide you through the entire process of stock and options selection to trade small accounts and grow them into larger ones. Let us know in the comments below if you would be interested in this “course”.

 

Let’s go and review this week’s investing and trading.

 

Here is our investing and trading report:

 

Account Value: $68,841.86 +$1,360.98 +2.02%
Options trading results
Options Premiums Received: $1,386.00    
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: $2,336.00 +4.30%  
05 May 2021 Options: $6,346.00 +9.22%  
Options Premiums YTD: $23,033.00 +33.46%  
Dividend income results
Dividends Received: $0.00    
01 January 2021 Dividends: $53.04    
02 February 2021 Dividends: $63.00    
03 March 2021 Dividends: $30.31    
04 April 2021 Dividends: $139.70    
05 May 2021 Dividends: $167.45    
Dividends YTD: $492.90    
Portfolio metrics
Portfolio Yield: 4.73%    
Portfolio Dividend Growth: 8.47%    
Ann. Div Income & YOC in 10 yrs: $14,023.53 19.95%  
Ann. Div Income & YOC in 20 yrs: $136,328.21 193.96%  
Ann. Div Income & YOC in 25 yrs: $715,025.21 1017.32%  
Ann. Div Income & YOC in 30 yrs: $6,341,595.23 9,022.64%  
Portfolio Alpha: 24.93%    
Portfolio Weighted Beta: 0.83    
CAGR: 836.76%    
AROC: 32.83%    
TROC: 21.93%    
Our 2021 Goal
2021 Dividend Goal: $1,071.42 46.00%  
2021 Portfolio Value Goal: $42,344.06 162.58% Accomplished

 

Dividend Investing and Trading Report

 
Last week, we have received no dividends capping May at $167.45 in dividend income. It was a bit disappointing to see no dividend income this week, but I still understand that our portfolio is in an accumulation phase and many stocks we purchased could not be eligible for dividends this month and we have to wait until the next payday period.

The chart below indicates our current annual dividend payout from our dividend stock holdings. A dividend growth investor needs to be aware of this payout from each stock. The chart indicates that some stocks contribute (or will be contributing to our income with large sums while others contribute very little. That can be a problem. If a company that contributes with large dividends suddenly cuts the dividend, it will have a very significant impact on our income (for example, if OMF cuts the dividend, or suspends it, the impact on our portfolio dividend income will be significant.

I am OK with this imbalance during the accumulation phase but plan to address it in the next phase of cultivating our portfolio. In other words, in the next phase, I will be accumulating stocks with lesser payout to match the stocks that pay more in dividends. If a company cuts the dividend, the impact of a lost income will be mitigated.

Last week, our dividend income reached 46.00% of our dividend income goal.

 
Annual Dividend Payout week 21
 

Options Investing and Trading Report

 
Last week we continued trading options against the stocks we either already own or plan to buy soon. We rolled or opened new short strangles against IJS, AAPL, SPCE, BA, AES, DKNG, O, OMF, WEN, ABBV, and APAM.

The new trades and adjustments delivered $1,386.00 options premiums last week. This concludes the entire month of May options income at $6,346.00 which became our best month ever since I started trading options in 2010.

You can watch all our trades in this spreadsheet and you can also subscribe to our newsletter for our trade alerts.
 

Investing and Trading Newsletter

 
We started (or better say re-started) our free newsletter. We will send to our subscribers a notification of our new trades when we open them, when we adjust them, and when we close them or let them expire. The newsletter will also explain the trade and our expectations. As of now, it is free but it will not be free forever. But all existing subscribers will be grandfathered and receiving the emails for free.

 

Expected Future Dividend Income

 
As the table at the beginning of this report indicates, our aggressive dividend growth stocks accumulation is starting to show significant progress in our future dividends income. Our portfolio dividend yield and dividend growth will be bringing us almost $136,328.21 in 20 years and $6,341,595.23 in 30 years. We will keep aggressively accumulating dividend growth stocks to generate liveable income sooner than in 20 years. And the portfolio is starting to show this to be happening.
 

Market value of our holdings

 
Our non-adjusted stock holdings market value increased from $70,601.91 to $74,857.07. We added to our positions to stocks such as SNOW, ABBV, and SPYG. We also kept buying an ISCH fund as “cash storage”.

 
Stock holdings week 21
 
Our goal is to accumulate 100 shares of each stock of our interest and we are getting to that goal. However, as mentioned above, this harms our dividend payout and portfolio growth. Although, it is temporary. Therefore, once we reach this goal (which we set because of the ability to trade covered calls), we will start accumulating these shares to equalize our dividend income rather than have an equal amount of shares.
 

Open trades

 
I decided to retire this spreadsheet as it became redundant and complicated to maintain. Now, you can follow more detailed trades in this spreadsheet.

 

Investing and trading ROI

 

Our options trading delivered a 9.22% monthly ROI in May 2021, totaling a 33.46% ROI YTD.

Our account grew by 234.63% this year.
 

Our options trading averaged $4,606.60 per month this year. If this trend continues, we are on track to make $55,279.20 trading options in 2021.
 

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 took advantage of tech weakness and added 4 shares of SNOW. I am getting nervous about accumulating Tesla (TSLA) in our portfolio given all the buzz about this stock. On one hand, Michael Burry is shorting this stock (and he is a very good investor and stock picker no matter whether you hate him or love him, so he should be taken seriously), on the other hand, Tesla is seeing profits and the company is still a way progressed industry leader. So, I am mixed on this. I might be adding more shares, but I plan on adding shares on the way up rather than cost averaging.

We also added 10 shares of SPYG which is a cheaper growth alternative ETF to SPY. It provides us with exposure to growth stocks at a cheaper price than buying SPY. We also plan on accumulating SPGL for the same purpose.

 

Accumulating Dividend Growth Stocks

 

Last week, we added 10 shares of ABBV to our dividend growth portfolio as it is still our primary goal to accumulate these stocks.

Our goal is to reach 100 shares of high-quality dividend stocks and build a weekly dividend income as per this calendar:
 

Weekly dividends income calendar
 
You can see the entire spreadsheet here.

 

Market Outlook

 

I added the first standard deviation (1SD) to the market chart to see how the market could behave on a month-to-month basis (see dark blue dashed lines at $4288 and $4023 levels for June 2021 month. The standard deviation is calculated using ATM straddle prices, and this is typically done at the standard monthly expiration date (a third Friday of the month).

 

Calculate 1st Standard Deviation

 

The calculation as you can see on the chart below was done last week on Friday, May 21st, 2021. And here is how you can do it for yourself (note some brokers indicate 1 SD, but they may be using slightly different calculations to arrive at their numbers, I prefer using options as they are indicative of how the market is pricing the next move in).

Based on your time frame and outlook horizon, you choose when you want to calculate these levels. If you want to trade SPX day-to-day, you may choose to calculate these levels every week. My time frame is a bit longer so I use month-to-month calculation. Below, I will explain why.

Look at the closing price of the SPX on expiration day and go to the next expiration Friday options chain. For example, if today, May 28th, 2021 was the standard third Friday (monthly) expiration, I could see that the market closed at $4,204.11. That is close to $4,205 strikes. That is why I chose that strike price. If the market closed at $4,201.05 for example, I would choose $4,200 strikes.

 
Calculating 1 SD

 
And now, take the midpoint of puts and calls and add them together. In our example on the picture above, our put midpoint would be $48.25 ($48.00 and $48.50) and on the call side $47.30 ($47.00 and $47.60). Adding these two values together gives us a $95.55 value. That is our 1st Standard deviation. Then add this value to the closing price of $4,205.11 to get the call side and subtract that value to get the put side. In our example, our call side would be $4,205.11 + $95.55 = $4,300.66 and $4,205.11 – $95.55 = $4,109.56.

Once you arrive at your numbers, do not change them for your time frame horizon. Keep the numbers to see how the market is behaving within that range.

 

Why these calculations may matter?

 

How can these levels and market behavior help you to feel the market and position your trades?

First, you need to understand, how big players trade options. Big traders sell options. They do not buy them unless they use them for hedging. Only suckers buy options as a trading vehicle and hope to be profitable long term. I can guarantee you that if you are buying options as your main strategy, long term, you will lose money. The big funds sell them and they will be happily selling them to you.

But, these funds do not trade naked or unprotected (unlike me, the sucker). They hedge their trades. They do not hedge their trades with cash but they use a synthetic position to their original trade to neutralize the negative effect of the market move.

And when the market starts moving towards the 1 SD, these big boys start hedging their positions. For example, if the market starts moving towards the upper level, that means that their calls are getting in danger and they start hedging those calls by buying underlying shares. And, that buying will further fuel the market move to the upside. And the more it moves to the upside, the more shares they buy to hedge their calls, and the more shares they buy, the more the market moves up… you get the point.

 

50% probability of going down

 

Given the behavior of the market, moving close to the upper level, as you can see on the chart below, the market may move higher. Yet, there is still a lot of indecision and it is hard to say what this market wants to do. There is still a lot of weakness and I still think we will go down to the level marked on the chart below, possibly even lower. But the probability of it happening is lower than last week.

 
SPX May 28 2021 outlook
 

Long term (one or two months outlook) the stock market will most likely push to the $4,300 – $4,400 level (second half of July 2021) and then we may see some serious correction (15% to 25%) before the market resumes its uptrend. We are still in a very strong secular bull market, so do not expect any catastrophe or doomsday as talking heads and Perma-bears start crawling out of their holes.

This probability still coincides with Ned Davis Research S&P 500 cycle composite market behavior as I posted last week, indicating that we may be seeing a correction.

 
Ned Davis Research

 

Investing and trading report in charts

 

Account Net-Liq

 

TW Account Net-Liq week 21

 

Account Stocks holding

 
TW Account holdings week 21
 

The table above shows our current holdings and gains. The “Options 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 6.50%. With options, our holdings are up 15.36% (from inception on 4/1/2019). The SPX is up 45.33% since inception.

Our options adjusted stock holdings underperform the overall market (up only 15.36% vs SPX 45.33%). On a YTD basis, the market gained 15.49% while our options-adjusted stock holdings grew 8.38%.
 

Account Growth YTD

 
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.

 

Our accounts are higher since 2017

 
This is something to celebrate. I started investing and trading stocks in 2006 (well, overall in 1996 but after I lost all my money (not knowing what I was doing), I stopped for a while and re-started in 2006) and I started trading options in 2010. I also started tracking all my financial accounts in 2013.

It was a long path towards success. A lot of mistakes (costly) and struggle. My accounts were zig-zagging in value providing no steady growth or income. In some of the accounts, I still pay for the consequences of my past reckless trading.

That being said, please, do not repeat my mistakes. Do not trade recklessly high-flying tips from Youtube, Reddit, or similar pump and dump social media. There will be people who will make money and they will be bragging about it very loudly (and selling their holy grail). But most people will lose money.

Yet, in 2017 I managed to grow our family accounts and this business account to the highest level I could ever dream of. Of course, just to lose it in the following years. In 2021, I finally recovered all my previous losses and managed to get higher. I am kinda proud.

 
Accounts growth

 

Investing and Trading Report – Options Monthly Income

 
TW Options Income week 21
 

Investing and Trading Report – Options Annual Income

 

TW Options Annual Income week 21
 

Our dividend goal and future dividends

 

TW Received vs Projected Dividends week 21
 

Our portfolio still doesn’t represent the true dividend income potential, but we are already seeing the results of our accumulation effort. We are on track to accomplish our dividend income goal, currently, we are at 46.00% of the goal to reach $1,071 of dividend income this year.

However, the chart below indicates that our dividend income will possibly exceed this goal as we accumulated enough shares to receive $3,352.06 in dividends.
 

TW Received vs Future Dividends week 21

 

Our account cumulative return

 

The chart below indicates our cumulative adjusted return. It shows how the last week’s selloff shook down our returns but we are recovering along with the market.
 

TW cumulative return wk 21
 

As of today, our account cumulative return is 22.56% (since March 13, 2021).

 

Conclusion of our investing and trading report

 

This week our options trading exceeded our expectations. I hope, the rest of the month will be even better.

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!




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Posted by Martin May 23, 2021
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What do we trade


You can read about our trading strategy on our Strategy Page to find more details on what we trade. But here it is in a nut shell:
 
 

1) We buy dividend stocks. We strive to buy high-quality dividend growth stocks, but we also do our research and buy good quality dividend stocks (not necessarily dividend growth stocks) for income, such as ETFs, or CEFs. We hold the dividend growth stocks forever (unless they cut the dividend). The dividend non-growth stocks are speculative. We hold them for income but if they fail to meet our criteria, we sell them too.
 

2) We accumulate these stocks, slowly, one by one, to reach 100 shares of each.
 

3) We sell puts against the stock positions on our watch list. These are stocks we either already own or want to own. We sell naked or cash-secured puts.
 

4) We sell calls against the stocks on our watch list. Once we reach 100 shares of our desired holding, our calls become covered, otherwise, we trade naked.
 

5) We sell puts and calls together creating a short strangle to collect premiums and we try to let the strangles expire. If any side of a strangle gets in danger, we roll the trade. If the trade is covered, we let it assign if we cannot roll.
 

6) We use all premiums and dividend proceeds to buy more shares of the dividend stocks.
 

7) Sometimes we engage in trading butterflies and ratio spreads but that is rare. We also trade poor man’s covered calls using LEAPS and selling covered calls.
 
 

This strategy allows us to generate 30% – 45% annual revenue on invested capital. If this strategy is appealing to you, you can subscribe to our free newsletter.
 

If you subscribe you will:
 
a) receive an email anytime we open a new trade
b) we roll a trade
c) we close a trade
d) receive an email notifying you about our weekly report showing how we did in the prior week trading options, receiving dividends, what stocks we were accumulating, and our market outlook.
e) receive an email notifying you about the stocks of our interest we plan on accumulating in the next month.
 

And, if you do not like what you see, just unsubscribe.




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Posted by Martin May 22, 2021
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2021 Week 20 investing and trading report


Another week of May 2021 is over and here is our weekly investing and trading report. A lot happened last week. We made some good trades and adjustments to our portfolio, but the biggest news was AT&T announcing cutting the dividend. It is quite shocking that a dividend aristocrat with a history of 36 consecutive years of dividend increases cuts the dividend due to bad management. It seems AT&T has bad luck picking good CEOs.

Last week, we continued the aggressive accumulation of dividend and growth stocks and traded options around those positions. On one hand, quite boring stuff, on the other hand, it brings joy seeing how the portfolio grows to bring more income from dividends and premiums. It is a pleasure to write these investing and trading reports.
 

Let’s go and review this week’s investing and trading.

 

Here is our investing and trading report:

 

Account Value: $67,480.88 +$10,221.69 +17.85%
Options trading results
Options Premiums Received: $783.00    
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: $2,336.00 +4.30%  
05 May 2021 Options: $4,960.00 +7.29%  
Options Premiums YTD: $21,647.00 +32.08%  
Dividend income results
Dividends Received: $27.75    
01 January 2021 Dividends: $53.04    
02 February 2021 Dividends: $63.00    
03 March 2021 Dividends: $30.31    
04 April 2021 Dividends: $139.70    
05 May 2021 Dividends: $167.45    
Dividends YTD: $492.90    
Portfolio metrics
Portfolio Yield: 4.80%    
Portfolio Dividend Growth: 8.47%    
Ann. Div Income & YOC in 10 yrs: $13,684.06 20.44%  
Ann. Div Income & YOC in 20 yrs: $135,787.62 202.84%  
Ann. Div Income & YOC in 25 yrs: $724,206.91 1081.81%  
Ann. Div Income & YOC in 30 yrs: $6,569,736.96 9,813.77%  
Portfolio Alpha: 22.03%    
Portfolio Weighted Beta: 1.01    
CAGR: 844.17%    
AROC: 32.21%    
TROC: 21.73%    
Our 2021 Goal
2021 Dividend Goal: $1,071.42 46.00%  
2021 Portfolio Value Goal: $42,344.06 159.36% Accomplished

 

Dividend Investing and Trading Report

 
Last week, we have received $27.75 in dividends. It was a bit slower income, but I expect to get more dividends as the new stocks acquisitions become eligible for payments.

The chart below indicates our current annual dividend payout from our dividend stock holdings. A dividend growth investor needs to be aware of this payout from each stock. The chart indicates that some stocks contribute (or will be contributing to our income with large sums while others contribute very little. That can be a problem. If a company that contributes with large dividends suddenly cuts the dividend, it will have a very significant impact on our income (for example, if OMF cuts the dividend, or suspends it, the impact on our portfolio dividend income will be significant.

I am OK with this imbalance during the accumulation phase but plan to address it in the next phase of cultivating our portfolio. In other words, in the next phase, I will be accumulating stocks with lesser payout to match the stocks that pay more in dividends. If a company cuts the dividend, the impact of a lost income will be mitigated.

Last week, our dividend income reached 46.00% of our dividend income goal.

 
Annual Dividend Payout week 20
 

Options Investing and Trading Report

 
Last week we continued trading options against the stocks we either already own or plan to buy soon. We opened a new short strangles against KBE, MU, OMF, and rolled short strangles against SPCE. We also converted a BABA Iron Condor to a strangle. It is easier to manage a strangle than Iron Condor when a trade is challenged. Although, trading strangles require large capital I am moving away from spreads and will be slowly converting them to strangles.

The new trades and adjustments delivered $783.00 options premiums last week. Even though the options income was smaller last week, we are still poised for the best month in 2021.

You can watch all our trades in this spreadsheet and you can also subscribe to our newsletter for our trade alerts.
 

Investing and Trading Newsletter

 
We started (or better say re-started) our free newsletter. We will send to our subscribers a notification of our new trades when we open them, when we adjust them, and when we close them or let them expire. The newsletter will also explain the trade and our expectations. As of now, it is free but it will not be free forever. But all existing subscribers will be grandfathered and receiving the emails for free.

 

Expected Future Dividend Income

 
As the table above indicates, our aggressive dividend growth stocks accumulation is starting to show significant progress in our future dividends income. Our portfolio dividend yield and dividend growth will be bringing us almost $135,787.62 in 20 years and $6,569,736.96 in 30 years. We will keep aggressively accumulating dividend growth stocks to generate liveable income sooner than in 20 years. And the portfolio is starting to show this to be happening.
 

Market value of our holdings

 
Our non-adjusted stock holdings market value increased from $62,960.61 to $70,601.91. We added many new positions, such as TSLA, ABBV, AAPL, EIM, EVN, etc. last week, and these positions do not show any profit yet. This had a significant impact on the overall portfolio performance. We, however, expect this to change.

 
Stock holdings week 20
 
Our goal is to accumulate 100 shares of each stock of our interest and we are getting to that goal. However, as mentioned above, this harms our dividend payout and portfolio growth. Although, it is temporary. Therefore, once we reach this goal (which we set because of the ability to trade covered calls), we will start accumulating these shares to equalize our dividend income rather than have an equal amount of shares.
 

Open trades

 
Investing and trading report
 

The table above shows our open trades (in a simplified version) and the margin or buying power required for those trades. I keep track of this to see what trades I have open and when these trades are set to expire. It helps me to see all trades in one place and I can review them all at one glance rather than browsing through all positions in a brokerage account trying to figure out which trade needs my attention. You can follow more detailed trades in this spreadsheet.

A few of our trades expired last Friday that impacted our BP requirements. Our BP reduction dropped by 6.94% from $50,349.63 to $46,854.20 (-$3,495.43). We will reinvest this free BP next week.

 

Investing and trading ROI

 

Our options trading delivered a 7.35% monthly ROI in May 2021, totaling a 32.08% ROI YTD.

Our account grew by 228.02% this year.
 

Our options trading averaged $4,329.40 per month this year. If this trend continues, we are on track to make $51,952.80 trading options in 2021.
 

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 took advantage of tech selloff and added 5 shares of SNOW and 1 share of TSLA to our positions. It is just a single share, but Tesla is an expensive stock and I can afford to accumulate these expensive stocks slowly. We still want to accumulate 100 shares of this stock and start selling covered calls. As of now, we trade Iron Condors against this stock, but once we accumulate shares, we will switch to a CC. I also plan to convert the Iron Condor into a strangle. That would require large capital (possibly around $8,000 of buying power), but I am OK with it. I plan on trading strangles against Tesla on weekly basis and hope to collect $600 a week premiums. Tesla is a very volatile stock so this trade will not be for everybody. It must be watched carefully and managed on daily basis.

 

Accumulating Dividend Growth Stocks

 

Our primary goal of our investing and trading strategy is to accumulate high-quality dividend growth stocks. Last week, we added 100 shares of EIM and EVN. We finished accumulating APAM and hold 100 shares of this stock. We sold AT&T (T) upon announcement of dividend cut and moved the cash to APAM. We accumulated a few shares of AAPL, and ABBV.

Our goal is to reach 100 shares of high-quality dividend stocks and build a weekly dividend income as per this calendar:
 

Weekly dividends income calendar
 
You can see the entire spreadsheet here.

We are reaching our weekly dividend income goal. The selling of AT&T derailed the goal a bit. We are replacing T with adding TD stock.

 

Market Outlook

 

The stock market is showing indecision. A few times last week, we saw a strong selloff two weeks ago and at the beginning of the last week, the market recovered the previous losses just to lose it all in mid-week. On Thursday, the market recovered it again, and on Friday the market rallied but lost all gains (showing a shooting star). This weakness still makes my expectation of going lower valid. If the market holds above the 50-day MA, we may see a renewed rally.

 
SPX May 22 2021 outlook

 

70% probability of going down

 
I give it a 70% chance that the $3,966 target will be met. The market is weak and indecisive and there are several factors that can be contributing to the correction. So far, we have seen 4.3% decline then recovery, and retest. But it is too soon to say whether it was a successful re-test or not.

 
Retest or not?
 

This probability coincides with Ned Davis Research S&P 500 cycle composite market behavior indicating that we may be seeing a correction. The chart below doesn’t necessarily say that we will see a correction next week, the pattern is not indicative of when it happens. It just says that it will possibly happen but as of today, we do not know when. To add my say to it, I would suggest that we are near a correction (or at least a sideways movement).

 
Ned Davis Research

 

Bullish and bearish cases

 
There are a few cases that speak to the bullish or bearish factors of this market. According to Fundstrat’s Tom Lee research, the institutional investors are sitting on $297 billion cash on the sidelines. That is a sum that can easily spike a bullish melt-up. That can be the last push-up before we see the correction.

On the other hand, we have fear of inflation, and Fed officials are starting to admitting that the inflation may be getting out of hand and a possible reaction from FED will be needed.

 

Investing and trading report in charts

 

Account Net-Liq

 

TW Account Net-Liq week 20

 

Account Stocks holding

 
TW Account holdings week 20
 

The table above shows our current holdings and gains. The “Options 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 5.46%. With options, our holdings are up 13.51% (from inception on 4/1/2019). The SPX is up 43.67% since inception.

Our options adjusted stock holdings underperform the overall market (up only 13.51% vs SPX 43.67%). On a YTD basis, the market gained 13.82% while our options-adjusted stock holdings grew 6.53%.
 

Account Growth YTD

 
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.
 

Investing and Trading Report – Options Monthly Income

 
TW Options Income week 20
 

Investing and Trading Report – Options Annual Income

 

TW Options Annual Income week 20
 

Our dividend goal and future dividends

 

TW Received vs Projected Dividends week 20
 

Our portfolio still doesn’t represent the true dividend income potential, but we are already seeing the results of our accumulation effort. We are on track to accomplish our dividend income goal, currently, we are at 46.00% of the goal to reach $1,071 of dividend income this year.

However, the chart below indicates that our dividend income will possibly exceed this goal as we accumulated enough shares to receive $3,288.19 in dividends.
 

TW Received vs Future Dividends week 20

 

Our account cumulative return

 

The chart below indicates our cumulative adjusted return. It shows how the last week’s selloff shook down our returns but we are recovering along with the market.
 

TW cumulative return wk 20
 

As of today, our account cumulative return is 20.17% (since March 13, 2021).

 

Conclusion of our investing and trading report

 

This week our options trading exceeded our expectations. I hope, the rest of the month will be even better.

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!




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Posted by Martin May 19, 2021
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AT&T announces cutting dividends… Goodbye AT&T


Dividend investors are outraged. At least, I am. This is probably the first time I feel betrayed by the company’s management. For months and years, AT&T (T) management was defending the dividends. Even at their latest conference call, they assured investors that their dividend is safe. And two days ago, the same management announces cutting dividends. So, I sold all my shares.
 

AT&T betrayal cutting dividends

 
I know one should never fall in love with any stock out there but I feel betrayed by the company management. The reason for this feeling is that when I decided to rebuild our portfolio in 2019 after unsuccessful 0dte SPX trading that almost wiped it out, AT&T was on my accumulation watch list. We were buying up the stock, little by little, every month after month, we were buying shares and accumulating our holdings. And we were also selling options. It took a lot of effort.

We finished accumulating AT&T just a few months ago reaching 100 shares, we continued accumulating more and we reached 150 shares just a month ago. And suddenly, the dividend cut.
 

AT&T cutting dividends by 50%

 
If you do the math, AT&T is set to cut its dividend by almost 50%. That will send the stock down to a $15 – $20 price level. If you purchased the stock at a $28 – $30 cost basis level, you will get ripped off. Your income will be slashed by half and your principal capital will be destroyed. I do not know how about you, but this is not acceptable to me.
 

AT&T zero growth for the last 20 years

 

AT&T cutting dividends
 

People were investing in AT&T for the dividend and sacrificing capital growth. Myself included. I was willing to buy and hold this “bond-like” stock for its generous dividend and accepting that there will be now growth.

My philosophy was that I can be selling options around my AT&T position (covered calls and puts) and collecting further income. That would be lowering my cost basis and artificially providing the growth. That incentive of safe steady and generous dividend is gone. What is now left is zero growth. Not interested.
 

The spinoff

 
The company is getting rid of Warner Bros and its HBO Max service. That could be a lucrative source of income for AT&T if managed properly. Not anymore. The new company let’s call it “Warner Discovery Time” will inherit approx $40 billion debt from AT&T. Add about $20 billion debt from Discovery+ and you will have a company burdened with $60 billion debt right from day one. That is about three times more than Netflix.

The new company will have about 60 million subscribers. Netflix has 260 million subscribers. The expected revenue of the new company is $35 billion annually but burdened by $60 billion of debt. Good luck competing with Netflix or Desney+
 

The consequences of bad management

 
This is a consequence of bad management. Their skyrocketing debt, horrible acquisitions, and now dividend cut. Well, AT&T is losing a dividend aristocrat status, so it is going away from my portfolio. I might buy back 25 years later… When it started all looking good and the company looked like finally taking care of their business, paying off the debt, and now screwing the investors again. There was no capital growth in this stock whatsoever for years. The only reason for holding this bond-like stock was a good dividend. And now, there is no reason holding it whatsoever.

There is a trust damage effect involved as well. I personally do not trust the management who mismanage the company so much that they have to cut the dividend. One thing is if they had to cut the dividend due to force majeure such as the pandemic, but I distrust the management which just a month ago was defending the dividend and saying that it was safe while they must have known that it was a lie as this deal didn’t happen in a month, so even if the stock goes to zero, I probably will not buy it…

Goodbye AT&T.




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Posted by Martin May 18, 2021
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The stock market flashes sell signal


The new all-time highs of the stock market seem to be out of the question for a while. With today’s price action, the stock market flashes sell signal more and more. This could morph into a deeper correction (5% only, or in the worst-case scenario 10%) and we may see this market slide back to $3,966 as originally anticipated.
 

The market flashes sell, sell, sell

 
At first, we saw a significant recovery from the 50-day moving average but then today, everything changed again.

Here is why I think the market flashes the sell signal:
 

  1. We bounced down from a short-term consolidation resistance (the thin short, dark horizontal line that I marked on the chart as a flag that has morphed into a horizontal channel).
  2. We also bounced down off of the significant major upward trending trend line (the magenta thick line).
  3. We reached the midpoint of the new megaphone pattern and bounced down, confirming the megaphone pattern being still in play and having a significant downward pressure on the market
  4. We are creating lower highs (the blue circles).

 

SPX market flashes sell
 

All these levels and occurrences, if you will, are bearish. They all point to more selling. And there are significant pressures out there that can play against each other.

One is all the inflationary fears out there that push the market lower, but on the other hand, there is a lot of cash sitting on the sideline which, if deployed, can change everything again. But. And that is a big “but”. Even if we see a correction, that correction will be short-lived. Normally, in an inflationary environment, the stocks perform well and actually grow. But this is not much true for high flying growth stocks. These may suffer. Thus many stocks like CRISP, Tesla, NNDM, and others may be under a pressure, other stocks may actually go higher.

 




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Posted by Martin May 15, 2021
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2021 Week 19 investing and trading report


The second week of May 2021 is over and here is our weekly investing and trading report. Last week was busy for us as we had to roll many of our trades down when the market started selling off due to inflation fears. But this fear, subsequent selloff, and a sharp recovery provided a great opportunity to add shares to our portfolio cheaply and boost our income significantly. Mess and panic create opportunity.

Let’s go and review this week’s investing and trading.

 

Here is our investing and trading report:

 

Account Value: $57,259.19 +$2,221.98 +4.04%
Options trading results
Options Premiums Received: $3,626.00    
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: $2,336.00 +4.30%  
05 May 2021 Options: $4,177.00 +7.29%  
Options Premiums YTD: $20,864.00 +36.44%  
Dividend income results
Dividends Received: $65.06    
01 January 2021 Dividends: $53.04    
02 February 2021 Dividends: $63.00    
03 March 2021 Dividends: $30.31    
04 April 2021 Dividends: $139.70    
05 May 2021 Dividends: $74.64    
Dividends YTD: $465.15    
Portfolio metrics
Portfolio Yield: 4.85%    
Portfolio Dividend Growth: 7.55%    
Ann. Div Income & YOC in 10 yrs: $10,956.20 18.55%  
Ann. Div Income & YOC in 20 yrs: $85,561.32 144.83%  
Ann. Div Income & YOC in 25 yrs: $363,003.91 614.47%  
Ann. Div Income & YOC in 30 yrs: $2,318,300.78 3,924.27%  
Portfolio Alpha: 26.72%    
Portfolio Weighted Beta: 0.97    
CAGR: 794.12%    
AROC: 36.83%    
TROC: 23.64%    
Our 2021 Goal
2021 Dividend Goal: $1,071.42 43.41%  
2021 Portfolio Value Goal: $42,344.06 135.22% Accomplished

 

Dividend Investing and Trading Report

 
Our dividend income picked up. We are seeing larger dividends coming to our account. We have received $65.06 in dividends last week, and I expect more dividends coming in the following weeks as we keep building our weekly dividend income.

The chart below indicates our current annual dividend payout from our dividend stock holdings. I am adding it to show how each stock contributes to our income. It is important for a dividend growth investor to be aware of this payout from each stock. The chart indicates that some stocks contribute (or will be contributing to our income with large sums while others contribute very little. That can be a problem. If a company that contributes with large dividends suddenly cuts the dividend, it will have a very significant impact on our income (for example, if OMF cuts the dividend, or suspends it, the impact on our portfolio dividend income will be significant.

During the accumulation phase, I am OK with this imbalance but plan to address it in the next phase of cultivating our portfolio.

Last week, our dividend income reached 43.41% of our dividend income goal.

 
Annual Dividend Payout week 19
 

Options Investing and Trading Report

 
Last week we continued trading options against the stocks we either already own or plan to buy in the near future. We opened new short strangles against ABBV, BA, OXY, AES, and rolled short strangles against T, OXY, KBE, MU, BA, AFL, CSCO, SPY, BNGO, TSN, SPCE, ABBV, AES, TSLA, AXP, BEPC, CROX, BAC, and APPL as these trades got one side of the trade into danger and we had to adjust to keep them in a sweet spot. Almost all our positions had to be adjusted. Unfortunately, it was a forced adjustment, meaning that as the market continued tanking, our margin requirements forced us to adjust these trades lower to stay safe. This can backfire as the market starts recovering sharply, I will have to roll these trades higher again for the same reason.

The new trades and adjustments delivered $3,626.00 options premiums last week.

You can watch all our trades in this spreadsheet and you can also subscribe to our newsletter for our trade alerts.
 

Expected Future Dividend Income

 
As the table above indicates, our aggressive dividend growth stocks accumulation is starting to show significant progress in our future dividends income. Our portfolio dividend yield and dividend growth will be bringing us almost $85,561.32 in 20 years and $2,318,300.78 in 30 years. It is a great improvement from the last report where we achieved a future dividend of $60,000 annually in 25 years. We will keep aggressively accumulating dividend growth stocks to generate liveable income sooner than in 20 years. And the portfolio is starting to show this to be happening.
 

Market value of our holdings

 
Our non-adjusted stock holdings market value increased from $60,327.92 to $62,960.61.

 
Stock holdings week 19
 
Our goal is to accumulate 100 shares of each stock of our interest and we are getting to that goal. However, as mentioned above, this has a negative impact on our dividend payout. Therefore, once we reach this goal (which we set because of the ability to trade covered calls), we will start accumulating these shares to equalize our dividend income rather than have an equal amount of shares.
 

Open trades

 
Investing and trading report
 

The table above shows our open trades (in a simplified version) and the margin or buying power required for those trades. I keep track of this to see what trades I have open and when these trades are set to expire. It helps me to see all trades in one place and I can review them all at one glance rather than browsing through all positions in a brokerage account trying to figure out which trade needs my attention. You can follow more detailed trades in this spreadsheet.

With new trades and trade adjustments, our BP reduction increased by 6.87% from $48,167.40 to $51,476.63 (+$3,309.235), yet our BP usage dropped from 125.60% to 123.70% (a 26% drop).

 

Investing and trading ROI

 

Our options trading delivered a 7.29% monthly ROI in May 2021, totaling a 36.44% ROI YTD.

Our account grew by 167.53% this year.
 

Our options trading averaged $4,172.80 per month this year. If this trend continues, we are on track to make $50,073.60 trading options in 2021.
 

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 took advantage of tech selloff and added 5 shares of SNOW and 2 shares of TSLA to our positions. I know, it’s just a few shares, but these are expensive stocks and I can afford to accumulate these stocks slowly. We still want to accumulate 100 shares of this stock and start selling covered calls. As of now, we trade Iron Condors against this stock, but once we accumulate shares, we will switch to a CC.

 

Accumulating Dividend Growth Stocks

 

Our primary goal of our investing and trading strategy is to accumulate high-quality dividend growth stocks. Last week, we added 25 shares of OMF and finished our accumulation goal. We now hold 100 shares. We will move on accumulating another stock – APAM.

Our goal is to reach 100 shares of high-quality dividend stocks and 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 continued the selloff fuelled by inflation fears and tech stocks retreat. The market was poised for a deeper decline but buyers stepped in and move the market higher creating a sharp V recovery. It still may turn lower next week, but it is unlikely. If we keep recovering we just cleared a 3.8% drop (pullback) not worth mentioning. As of now, it is difficult to estimate the next market move. We may still keep consolidating here or keep going higher.

 
SPX May 14 2021 outlook
 
However, this small mini-tiny-crash still offered a good opportunity to add more shares at good prices.

 

Investing and trading report in charts

 

Account Net-Liq

 

TW Account Net-Liq week 19

 

Account Stocks holding

 
TW Account holdings week 19
 

The table above shows our current holdings and gains. The “Options 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 6.58%. With options, our holdings are up 15.69% (from inception on 4/1/2019). The SPX is up 44.29% since inception.

Our options adjusted stock holdings underperform the overall market (up only 15.69% vs SPX 44.29%). On a YTD basis, the market gained 14.44% while our options-adjusted stock holdings grew 8.71%.
 

Account Growth YTD

 
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.
 

Investing and Trading Report – Options Monthly Income

 
TW Options Income week 19
 

Investing and Trading Report – Options Annual Income

 

TW Options Annual Income week 19
 

Our dividend goal and future dividends

 

TW Received vs Projected Dividends week 19
 

Our portfolio still doesn’t represent the true dividend income potential but we are seeing the results of our accumulation effort already. We are on track to accomplish our dividend income goal, currently, we are at 43.41% of the goal to reach $1,071 of dividend income this year.

However, the chart below indicates that our dividend income will possibly exceed this goal as we accumulated enough shares to receive $3,026.50 in dividends.
 

TW Received vs Future Dividends week 19

 

Our account cumulative return

 

The chart below indicates our cumulative adjusted return. It shows how the last week’s selloff shook down our returns but we are recovering along with the market.
 

TW cumulative return wk 19
 

As of today, our account cumulative return is 20.03% (since March 13, 2021).

 

Conclusion of our investing and trading report

 

This week our options trading exceeded our expectations. I hope, the rest of the month will be even better.

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!




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Posted by Martin May 11, 2021
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Will tomorrow’s CPI report save the market?


In my weekly reviews, I post my market expectations for the week. My expectation was that the market broke up from a small consolidation pattern and would most likely continue higher.

A few days later, everything changed.

At first, the markets took the bad news about jobs as good news. Analysts expected 1 million new jobs, but the economy added some meeker 260 thousand new jobs, only. The market took it as confirmation that FED will not raise the rates.

But then, the market started worrying bout inflation which in my opinion is irrational, well, irrational if we ignore FED.

If we have fewer jobs, fewer people will have less money to spend and thus inflation should be no issue. But the government and FED have given too many people too much money to spend even though they have no jobs.

And the markets crashed, led by NASDAQ as high-flying tech stocks do not like high inflation and high-interest rates which cut their growth.

The latest price action in the markets effectively cancels the previous pattern and it has morphed into a pattern called a “megaphone”. And that pattern is a bearish one. There is a very high chance that the price will break down from the megaphone. If that happens, the 3966 price level will be the retreat…

What can stop it? Only good news on the CPI report tomorrow.

 
SPX market expectation
 




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