Still no clue what I’m doing

by JDH on February 6, 2016

This week, same as last week.  Last week I said this:

My strategy this year has been relatively simple.  I own TLT – iShares 20+ Year Treasury Bond ETF.  It’s a long bond fund, so as interest rates decline, it goes up.  It also pays interest.

Every week I do covered writes against my shares.  I sell call options against the shares I own.  I generally sell options that expire at the end of the week, and I sell them at slightly out of the money.

Once again, it would appear that I have outsmarted myself.  I should have simply held the stock, and not tried to increase the return by doing covered writes.  Here’s an updated version of the transaction history I showed last week:

  • December 31, 2015 dividend + $254.03
  • Covered write, January 4, $122 strike, expiring Jan 8 +$992.46
  • Buy back Jan 8 calls – $767.50
  • Covered write, January 12, $123.50 strike, expiring Jan 15 +$582.49
  • Buy back Jan 15 calls -$2,117.50
  • Covered write, January 19, $126 strike, expiring Jan 22 +$477.50
  • Buy back Jan 19 calls -$2,072.49
  • Covered write, January 20, $128 strike, expiring Jan 22 +$797.49
  • Jan 20 calls expire worthless
  • Covered write, January 26, $126.50 strike, expiring Jan 22 +$632.49
  • Buy back Jan 26 calls -$937.50
  • Covered write, January 29, $128 strike, expiring February 5 + $502.50
  • Buy back Feb 5 calls, -$705
  • Covered write, February 5, $129 strike, expiring February 12 +$910

The net result of all of these transactions, if you add up the pluses and minuses?  A loss of $2,866.03

Yikes.  The only saving grace?  I still own the stock, which on December 30 was worth $120.04 per share, and on February 5 was worth $128.66.  So, the profit on 1,000 shares is $8,620, which ain’t bad.  Of course it’s $2,866 less than it would have been if I had just held the stock, but there you go.

Some Thoughts on Gold

What about gold?

GoldFeb6-2016

A quick review of the long term chart would appear to indicate that the recent upsurge is probably about done.  Like dinner.  Why?

  • Long term down trend lines remain in place.
  • The RSI is now at levels that, for the last three years, have marked intermediate tops.
  • The world has not ended, yet, so there is no reason for gold to keep rolling higher.

I have lightened up on some of my gold holdings, and done covered writes on the rest.  Sadly I think, for now, we are about done.

Next week we can explore whether or not the general stock market is about to charge to a blow off top, or collapse from here.  At the moment it’s not looking good.

Thanks for reading.  More next week.