Welcome to the year end review. I'm not sure what the best way to write/grade this post, so bear with me while I wing it. I also don't expect it to be too in depth. And while I will likely comment on open trades and make note of the total portfolio value, I will be focusing on realized gains.
I wasn't very active with the published trades this year, but I hope to do more consistent posts this year. I only had 23 trades(including rolling options) in about 8 months and since this blog is more of a high percentage singles hitter than a home run hitter with lots of strikeouts, the gains on these trades is often pretty small. This means my total returns are going to be smaller than I was hoping for. This should improve as I do more trades in 2012.
First up is my inaugural trade: the Microsoft covered call. I still have the shares of stock and it finished the year up slightly with just over 2% in unrealized gains. More importantly though I received $52 in dividend income and $54 in covered call proceeds for a total realized gain of $106 for about a 4.2% gain on the initial outlay of $2,541. This trade will never be a huge winner for the portfolio because I'm not tracking reinvested dividends and on a stock like MSFT I'll be more conservative on the covered calls so that I don't get my stock called away from me.
Cisco was a moneymaker for me this year. I started with some longer term naked puts which I eventually closed out for just $0.08 per contract for a total realized gain of $196 for both contracts(approx. 30% gain on margin) in 7 months. The other CSCO trade ended up being 6 trades in one as I rolled it out a several times. I also closed out that trade for $0.08 per contract after receiving a total of $209 per contract in option premiums for a total realized gain of $402 on margin requirements of approximately $650 for gains of about 63% in just 7 months. All told, I had $598 in realized gains with Cisco. Not too shabby.
Usually a regular trade for me, I just didn't have the time this year to do much expiration week trading, but back in June I did make a couple trades(both winners). I realized gains of $33 on First Solar and $28 on Amazon. At less than 1% combined gain on margin, this was a small winner, but I was only in it for 2 days and would normally be doing several trades like this every month. Those start to add up.
I did do a fair amount of arbitrage trades. It was successful for the most part, but I also had my only realized loss on an arbitrage trade.
- VSEA - Closed out for a total gain of $140(about 11% on margin) in about 3 months
- KCI - Closed out for a total gain of $125(about 8% on margin) in about 3 months
- LZ - Since I already had this trade on the books before I started the blog, I tracked this one with the price I could have gotten at the time so my realized gains on this one are smaller than the actual gains I saw in my account. Still, I closed it out for total gain of $60(2.1% on margin) in just a month and a half.
- MMI - Still open and in the black.
- NETL - Still open and in the black
- PPDI - Closed out for a total gain of $96(about 12% on margin) in just 6 weeks
The Encana naked puts is also a loser so far as well, but it's still open. My timing was pretty bad on this one and I already rolled it out once and likely will have to at least once more to turn this trade profitable. I will look at this trade again at option expiration in a couple weeks and decide whether to stay in it or not.
My leveraged gold trade wasn't quite as profitable as I was hoping, but I won't complain about a 5.5% gain in a month. I closed it out at $56.83 after buying at $53.86 for a total gain of $148.50 on an initial outlay of $2,693.
The Berkshire naked puts and Microsoft naked puts were both winners, but I didn't close them out until January 3. For 2011 purposes, they are both unrealized gains.
The only other trade that was closed out in 2011 was the quick trade on the SSO puts. This was another quick, low return profit that gave me a realized gain of $36(about 1.5% on margin) in just 4 days.
All told, I had realized gains of $1,044.50 on an initial portfolio of $25,000. That comes out to about 4.2% in 7 months for an annualized gain of about 7.2%. I normally won't use annualized gains except on the year end review because I do so much short term trades and it skews the results pretty drastically. For example, that SSO trade that made me 1.5% in 4 days would equal nearly a 100% gain if you annualize it. That's not an accurate representation of the trade, especially when I'm not making that trade every week.
4.2% isn't great, but considering the overall market was almost dead even for the year(looking at the S&P500), it's pretty good. If I beat the market by 4% every year, I'd do pretty damn well for myself.
As for the unrealized gains, the model portfolio at market close today(January 4, 2012) is $26,160.50 for a gain of $1,160.50 or just slightly more than my realized gains.
Here's to a great 2012 folks!
No comments:
Post a Comment