Not much of a surprise here, since May expiration had already booked almost all the profits for the month. The only exceptions were BIDU and GS, which I held into expiration. Reason? BIDU was way ITM on the Bull Put and it was a total loss (-$250) and the GS Bear Call was so far OTM I let it expire (+$237) without any action. So between the two is was a wash profit-wise.
It felt good to crush the S&P 500 this month and get a great edge up on the YTD against that average, since as of the end of May it’s actually down 2.3% YTD while the Spread Account is up 27.39%. It will be very hard for the S&P to catch up – unless I stumble and blow it completely! The secret, as I keep telling my spouse, is to not get over confident and cocky. She’s my conscience and has been instructed to bring me back down to earth whenever I start to talk smack!
Conservative Account
Last Friday I rolled LLY down to a JUL 34 from the JUN 36. The JUN 36 was worth less than a nickle, so there was no transaction cost for buying that one back and I got a nice credit on the roll of 58¢. The roll, however, almost put me underwater on the Covered Call – but only almost. I have no explanation of why the price dropped so fast, but once it blew through support at 34, I figured it was going to be down for a while. You can see the detail via the Conservative Account tab or via this link.
Although I don’t intend to have any of the Conservative stocks called out (with the exception of NOK), it’s interesting to figure out wheat the gain/loss would be if I was. The table in the right is one that I will maintain and put into a post monthly. It’s just another way to look at the potential return on this account.
Speaking of return, you will note that this account is still down for the year. Logical, since the market is too. But it’s necessary to note that while the stock prices are suppressed, the strategy used in this account continues to generate cash each month. Since it’s inception on 11/19/09, it has generated a total of $5,134 in cash. Since the account’s value at that time was about $34,000 – the total cash generated represents a gain of just over 14%. The way that I track the account, however, is by simply relaying the balance at the end of each month and calculating return based on that.
Speaking of NOK, I may need to take my loss and get out (the current cost basis is 11.78 and the price is at 10.09 with a JUN 12 Call). I just need to find another Buy-Write candidate to replace it. I love to shop – I’ll let you know what I come up with.
NOTE: Altria (MO) looks pretty good with a 7% Div yield and a DivEx date of 6/11. Hey, tobacco is a vice that usually does well (along with alcohol) in a poor economy – go figure!
◄ Jeff ►
