Commentary
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First, my apologies for the putative 2/8/2007 report sent to you a few
minutes ago. There are some unknown (to me) short-cut keys in Outlook and
I've hit them a few times these past two weeks with unexpected results
following. One of them is that Ctrl-Enter (I think) will send a message
merrily on its way. I'll try to be more careful in the future but this
nonsense should end once we have the blog up and running. Max confirmed that
he'll be here next weekend to do a major, major overhaul on all my computers
as well as upgrade all my software with the latest and greatest from
Microsoft you've been hearing about. What fun!
I hope you like the new look to the report. Basically, I've broken the one
big table into two because the two sides of the table, while somewhat
related really was showing two different phases of the investment cycle: the
Closed Trades are the culmination of the cycle, similar to when a business
sells its inventory to the public thereby increasing cash, and the NLV-S&P
comparison which gives a strong idea of where the portfolio returns are
headed prior to the "inventory" of options being closed.
I also expect to comment about the general market and conditions less except
if there is a particular extreme or unusual activity therein. I will try to
highlight my thought processes connected to my trades as I want this report
to be more like a trading journal rather than a magazine article. This
should result in a more stream-lined, and therefore easier to read, report.
I hope you like it and encourage you to email me your comments and
suggestions to help me make this report even better for you.
Finally, in an operational matter, the last few trading days have found the
NLV Portfolio working fairly close to "fully invested" as defined in my
trading approach. So now, each day I look forward to harvesting a few
"apples" from my option contract orchard, booking the profits (losses?
<groan>), and reinvesting in more potentially, high AROM contracts. And if
the market will continue to cooperate, I want to do this again, and again,
and again, and ag... <g>
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Put Trading Activity for Report Date
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Generally, we want STO Premiums to be as big as possible and we was BTC
Premiums to be as small as possible. This would give us
optimum profits. In other words, we want to buy low and sell high, but with
put writing its always in reverse order. Note that all Premium, STO, and
Profit/Loss Columns should be multiplied by 100 to get the per contract
numbers and that all positions we enter into will always be for as least two
but probably more contracts per position.
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Abbreviations: STO-Sell to Open; BTC-Buy to Close; AROM-Annualized Return on
Margin; S/L Tgt-Stop-Loss Target
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Sell to Open (STO)
Symbol Expires Strike Premium BTC Tgt S/L Tgt Sell By Date
AKAM 01/19/08 $30 $0.55 $0.35 $0.80 03/08/07
ATI 04/21/07 $85 $1.20 $0.70 $1.75 03/08/07
STJ 01/19/08 $30 $0.55 $0.35 $0.80 03/08/07
Buy to Close (BTC)
Symbol Expires Strike STO BTC Profit/Loss
Days Held AROM
WY 01/19/08 $0.90 $0.80 $0.10 8
62.8%
NIHD 03/17/07 $0.35 $0.20 $0.15 7
112.6%
WY has an earnings announcement scheduled for tomorrow. I really wanted to
get rid of it, yesterday but couldn't get a fill at my price. I knew I still
had one day grace before the announcement so I chanced waiting a day for a
better fill. The upshot. I could've sold yesterday at the same price thereby
releasing some margin funds and getting a better AROM as a result of holding
one day less. One never knows when an adverse "pre-announcement" leak gets
out and I wind up with either a smaller profit or worse, a loss where a
profit was due! Lesson learned: If I can't get my fill at the price I want
then by the end of a trading day, GET OUT at whatever the market price is.
NIHD is the first bigger profit I've taken on a position opened after I
started integrating some of my newer trading rules. It was worth an
additional $5 PER CONTRACT.
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Disclaimer:
This is the fine print and is designed to protect me in these litigious
times, and until I get better wording for this disclaimer, you are under
notice that I am not selling my services nor any other product, nor am I
trying to induce you to trade along or independently, with me. I am merely
offering a journal, so to speak, of my portfolio's transactions and results
with the hope that you will glean information and educate yourselves in the
stock market in general and option trading dynamics in particular. Trading
in the stock market and in options involves substantial risk and much money
may be lost. Beginners, especially those with little or no understanding of
the stock market, lose most, if not all of their capital in a relatively
short time. In other words learn from me and my mistakes and if you want to
risk your money in the markets, that's your business and has nothing to do
with me. I am not your representative, broker, advisor or any other type
agent acting in your interests. As a matter of fact, if you want to invest
your money, I recommend you hire your own advisor other than me.
Copyright (c) 2007 Leonard Mednick, MBA, CPA (Ret); Managing Member LIME
Holdings LLC
_________________________________________________________________
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