January Trades

Trades:

• DNDN and YPF got assigned.
• RENN call expired.
• Withdrew all cash from margin account.
• Queued to buy for TFSA: (dividend paying stocks)
• 2x DCIX @ 6.70
• 2x TWO @ 12.35
• Queued to sell RENN @ 6.60. Currently trading at less than 4.00.

Gut Check:

• What's done is done, I guess. I'm out. Horrible loss on the DNDN. RENN still stuck.
• Can't withdraw my TFSA but I'm not putting new money in. With what I got from dividends and the YPF assignment, I'm buying two more dividend-paying stocks to diversify a bit.

Regrets

I've been thinking back to last year, and how I went ahead and bought more stocks to sell options when the current ones were down a lot. I made money up front, but subsequently got caught in a downturn and everything plummeted. Most of it won't recover. Losses are in excess of 10,000. Possibly as much as 50% of the seed money. I've been wrestling with the regret of not having pulled back. Not having listened to my fear and doubt and just stopped. But then I think that I would have had a different sort of regret. The regret of missed opportunities. Of wondering about what could have been. No, I think a crash and loss of the type I'm experiencing now -- or will experience when I'm very likely going to be assigned on my Covered Calls in January -- was inevitable. And it is the only sort of thing that would have made me stop trading. Otherwise, why would I? I was making money. Lots of it! At least in comparison to what banks and mutual funds and REITs were offering. Stock trading is a very negative game. You're hooked till you lose. And then you could keep going to get back your winnings, but then you'd be like a problem gambler.

November Trades

Trade History:

• November 30th:
• Sold 5x DNDN Covered Call Strike 5.00, Limit 0.25, expiration January 19/2013

Gut Check:

• DNDN peeked up a *bit* because of good earnings news. It'll be awful if I get assigned, but if I don't do anything I won't make any money. Even if I did get assigned, the stock has been down for a long time and it's possibly unlikely it'll ever recover to what it was when I bought it. Anyway, we'll see what happens.
• 
  

October Trades

Trade History:

• Dividend of 9 cents per share ($9 per contract) on a total of 600 shares of CIM -- 0.23% ROI for December
• November 8th:
• Sold 8x RENN Covered Call Strike 4.00, Limit 0.10, expiration January 19/2013
• Sold 3x YPF Covered Call Strike 12.50, Limit 0.10, expiration January 19/2013
• January ROI will be about 0.34%.

Gut Check:

• Everything's down. Thinking of wiping the slate by selling everything and putting the money into dividend-paying stocks, but I'd never recover the loss. For now, selling what options I can. If I get assigned, it wouldn't be worse than selling right now.
• If either of the Calls get assigned, losses will finally be more than paper losses and will be pretty ugly.

September Trades

Trade History:

• No trades.
• PCX Covered Call I wrote in May now expiring worthless, so I am now putting down the $118.04 credit as realized. This works out to 0.52% ROI for September.
• PCX busted down to around 0.141 cents. No bids for Covered Calls. Some puts can be written, but for a December expiration. I am going to hold off doing anything here and just watch them for now.

Gut Check:

• Sad about PCX but not much can be done now. Just waiting. Based on the Puts, there's a lot of hope out there that they will recover by year end. Fingers crossed!

August Trades

Trade History

• Converted 49.79 USD. Questrade gave me 49.46 CAD. Withdrew by ETF to bank account.
• Changed YPF Covered Call Strike 15.00 expiration October 20th Sell To Open order from Limit 0.50 to 0.25. Executed on July 30th.
• ROI 1.27% if it expires worthless.

Gut Check

• Changed my Sell-to-Open order from Limit 0.50 to Limit 0.25 as the price on YPF had dropped significantly and it was no longer reasonable to expect that sort of premium even though around the July options expiration it had been at that level.
• If it didn't fulfill, I was ready to risk a Strike 12.50 at 1.35 in January. If I got assigned, I'd more or less have broken even and at least got my money back to put into something that required less watching.
• Still stuck waiting for options expiration on the other stocks.
• ROI for the July 21 to August 18th options period is 0.17% because of dividend payments from CIM to both the Margin Account and the TFSA Account. The other open Covered Calls haven't expired yet.
• ROI for August to November at this point looks like 2.26%.

August Trades

Trade History

• Converted 49.79 USD. Questrade gave me 49.46 CAD. Withdrew by ETF to bank account.
• Queued a Sell To Open 3x YPF Covered Call Strike 15.00 @ 0.50, expiration October 20th. ROI 2.80% if it expires.

Gut Check

• Overall feeling depressed by the horrible loss of equity value. After the current calls expire, I won't be able to sell any PINK:PCXCQ (Patriot Coal) options. There's some talk about it being a grossly undervalued company at the moment, but things look so bleak.
• Portfolio value is down to about half. Yikes!

PCX shocker

Trades: None

Gut Check:
In May, I decided to stop obsessively watching the stock prices and just sell covered calls several months ahead but at "safe" strike prices -- that is, with a strike price of what I bought the stocks for.

Then I stopped looking. The Covered Call for YPF is expiring soon, and now that I've looked, I discovered that PCX has plummeted to around 23 cents -- from $6 when I bought it!
Damn.

My margin account is about 1/2 of its book value.

Not sure what to do except just to wait it out and see if it will ever recover. Can't even write Covered Calls on it.

Can't write Covered Calls on CIM either since the price is low and there aren't useful premiums to get.

Mostly just sitting. Might get to write a 12 to 15 cent Covered Call on YPF early next week for the TFSA account. We'll see.

Overall I think it's been too much watching and worry and I'm going to start pulling out as well as withdrawing money when I can.

June Trades

Trades: NONE

Gut Check:

• Stocks still down, but there were some spikes upward in there. If I had set my strikes incorrectly, I might have lost money. Still feels really passive not to take some risks, but at the same time, I'm not obsessively watching the markets. Starting to wonder if it's a good tradeoff by making a (lot) less money in exchange for safety.
• CIM dropped a lot after announcing a 2 cent decline in dividends (was 11 cents in the first quarter). No useful Covered Calls to write at this time. Waiting for it to go up again. IF it goes up again.

May Trades

Trades:

• May 26th: Bought 3x CIM @ 2.79 for both the Margin account and the TFSA account.
• Tried to short 300 shares of FB. Order rejected by QuesTrade -- "not enough shares to short"!

Gut Check:

• Sitting tight on CIM instead of selling any options, since ex-dividend day is probably coming up in June.
• Can't even do a fairly sure trade like FB. I'd psyched myself up all night to do it, since no matter what it's still speculative -- one press release by an analyst and it could reverse its downward trend and spike up in price, like last week with the Needham announcement.
• FB price is plunging again. Down over 50 cents from open, which was my cut-off to get out of the short position. Damn! If I could have shorted it, I'd be up an easy $150. Oh well.

May Trades

Trade History:

• Sold 5x DNDN Covered Call Strike 14.00 @ 0.25, expiration November 17th
• Sold 8x PCX Covered Call Strike 6.00 @ 0.17, expiration September 22nd
• Sold 8x RENN Covered Call Strike 7.00 @ 0.30, expiration October 20th
• Sold 3x YPF Covered Call Strike 15.00 @ 0.50, expiration July 21st
• Queued a buy for 3x CIM @ 2.75

Gut Check:

• Implementing the new trading strategy to remove speculation and spend less time watching the market instead of trying not to get assigned.
• Feeling nervous because this will commit me for several months for some of these stocks. There may be severe regret if they pop up from their current slump and shoot to fantastic values.
• DNDN sold at 0.25, but when I checked the quotes shortly after, it was in the ~0.30 range! Don't know why I got such a lousy price. :-( And for some reason it is showing 0.85 to close the position.
• 
  

Still considering new trading strategy

Ever since March, I've been stressed over writing Covered Calls on DNDN, trying to make 2% each month at option Strikes that were below what I paid for the stock, since the stock fell. And it fell a lot.

This month, the entire portfolio of stocks is down a lot, so except for YPF, I can't write a Covered Call for options expiring in June without choosing a Strike that is well below the price I paid per share. I might still get 2% ROI on each stock, but that involves a lot of watching, speculation, and stress. And I could be wrong, like I was in March and especially in April, where there was a huge 3% loss in just days.

If I were to remove speculation entirely, I could by selling Covered Calls for options expiring several months ahead. I would gain a certain amount of peace of mind and reclaim a lot of time watching the market and stressing out. In exchange, I am giving up potential gains -- capping any profit from the stocks going up a lot suddenly. And these are all volatile stocks to begin with.

After thinking about this more intently over the last couple of days, I think this will be my new strategy for stocks that have fallen a lot in value. It goes back to the original principles of not speculating and not spending a lot of time watching the markets.

There will be some idle cash in the portfolio because of this, and I think I will spend it on dividend-paying REITS. Looking at CIM at the moment.

Rethinking my strategy and targets

I was looking at Facebook this morning, intending to short it. I'd heard it might be allowed today, and QuesTrade did let me queue a short order (possibly a naked short). I decided to tune in to Twitter to see what was going on with FaceBook. Generally negative, it seemed, until a story broke about a valuation at Needham rating it a "buy" with a price target of $40. I personally find a a less optimistic and comparison-based valuation more realistic.

In any case, the effect, it seems, has been to inch the pre-market price up over 2% (at the time I am writing this). So much for doing a short. I suppose it is still possible if you can trade in the brief ups and downs and are willing to watch the market, BUT the cost is time. Since last night, I'd been thinking of my overall options trading strategy and how much time it has consumed in the last few days.

I have been aiming for 2% in the worst case, and it can be easily exceeded by picking volatile stocks and selling Covered Calls on them. It worked well in the early months, but I always knew that I could end up holding a stock that had plummeted in value. In the early days, I joked about it with my friends saying I could buy BP and they might lose a tanker offshore the next day, leading to a huge price drop. I never imagined that market manipulation could do that just as easily.

Right now, I'm holding DNDN, PCX, RENN, and YPF, all of which gave nice returns initially. But the price has since dropped a lot, so now I can't afford to be assigned on my Covered Calls, which in turn means I need to be careful choosing my Strike prices, and that in turn means keeping a closer eye on price movements in case I need to do a buyback because the stock price spikes up -- like it did with DNDN last month, resulting in a 3% loss in just 3 days.

So now I'm rethinking my whole strategy since 2% a month can sure take a lot of work when you're holding on to stocks you need to babysit. For one thing, I'm thinking of exiting trading altogether. I could day-trade, but that wasn't the point. One of the important factors for me was limiting time spent.

My exit strategy from here might be:

• Write a longer-term expiration Covered Call, where (Strike Price + Premium earned) > (price paid per share). Not exactly a LEAP, necessary, but a few months ahead.
• As I return to a cash position, switch out to (boring) dividend paying stocks and do more longer-term expiration Covered Calls.
• When the portfolio is allowed to trade Cash Secured Puts, I will then try that. Or possibly just keep the portfolio at 8%+ dividend stocks and call it quits.

Holding for now

Trades: None

Gut Check:

• Seriously thinking of shorting FB!
• Holding on all stocks -- No useful short-term calls I can write at the moment, compared to the risk.
• DNDN is climbing upward slowly. Can't write any useful safe options except maybe a November call on 14.00 for a slightly more than 2% return. I might still end up doing something like that. I think I'll give it till the end of the options period. If I'm paralyzed by low prices, I'll write a safe but farther-ahead call. If the price goes up... well, I'd be out and up a bit. Not 2%/month, but at least I'll be out of the position.
• PCX could be busted down to nothing -- there's even talk of bankruptcy, or at least cash flow problems. Still, stock might inch up a bit. Same situation as DNDN -- nothing useful to write now.
• RENN could climb back up a bit while FB slides down. Will wait.
• YPF: I could write a ~1% ROI covered call for Strike 15.00, but there's no point. I might as well wait for the 12.50 Strike to reach a price where I can sell a call on it and still come out ahead. In any case, if the new administration pays out dividends similar to what the company used to do, then there's no hurry and I can just hold.
• Overall I feel paralyzed by inaction, but also anxious to make even a bit of money. Still aiming for 2%/month, but feeling foolish about the risk and I would feel really bad if I lost money making bad bets.
• Very long-term Calls with Strike Prices on or above what I paid for the stock, are another option I need to start looking at. Better safe than sorry?
• I played with too-volatile stocks, and now I have to deal with idle money, and possibly never liquidating them.

May Trades

Trades:

• None yet. Queuing some Sell-to-Open Covered Calls but waiting to see if stock prices rebound a lot over the next couple of weeks.
• DNDN: Queue Strike 9.00, Limit 1.00
• Price of 5.30 to make 2% ROI if I am assigned.
• Price of 0.31 to make 2% ROI if the option expires
• Price of 0.04 to make any money at all after commissions.
• PCX: Queue Strike 5.00, Limit 1.00
• Price of 1.17 to make 2% ROI if I am assigned.
• Price of 0.15 to make 2% ROI if the option expires
• Price of 0.03 to make any money at all after commissions.
• RENN: Queue Strike 5.00, Limit 1.00
• Price of 1.78 to make 2% ROI if I am assigned.
• Price of 0.16 to make 2% ROI if the option expires
• Price of 0.03 to make any money at all after commissions.
• YPF: Queue Strike 15.00, Limit 1.00
• At any price, I would make money if I were assigned.
• Price of 0.37 to make 2% ROI if the option expires
• Price of 0.04 to make any money at all after commissions.

Gut Check:

• Oh boy. All stocks down. A LOT.
• I am trying to be more organized about selling my Calls, and maybe not be so anxious to lock in a price -- especially after the fiasco with DNDN where I sold a Call, only to have the stock rebound in price above my Strike, forcing me to buy it back.
• I will probably wait 1 week or so to see whether the stocks keep recovering their price.
• DNDN and PCX are supposedly oversold, so they could keep going up.
• RENN is down a lot, probably dragged down by general sentiment after the Facebook IPO fiasco. I could write a call now, but it might still rebound.

Options Expiration Day

Trades: None

Gut Check: 

• It's options expiration day again. All my options look like they will firmly expire worthless out of the money. Which is okay for now, except all the stocks have fallen a lot in price.
• There was also an interesting article about stock price manipulation and how it has devastated DNDN. Conspiracy aside, it is obvious that playing with volatile stocks can have both high option premiums and liquidity consequences. I always knew that and had a contingency for that -- cautiously selling Covered Calls while waiting for a time to sell -- but in practice it is proving more stressful than I expected, and as early April showed with my 3% loss in just a few days, it can be very tricky.
• Moving ahead, I think I will still continue my options trading experiment. For the current batch of stocks, liquidity is a huge issue so I might not get to the 25,000 I need to trade Cash Secured Puts any time soon. It may even be that I will have to babysit these stocks for a very, very, long time.
• Come Sunday, it will be time to look at how to place my Strikes again. I'm thinking of a two-dollar gap for those options with Weeklys, and just staying put for a few days for those options that expire in June, to see if prices peek up a bit and hopefully write Calls at a higher strike and/or a higher option premium.

May Trades

Trades:

• Sold to Open 8x PCX Covered Call, Strike 6.00 @ 0.15 (May 19th expiry)
• Sold to Open 8x RENN Covered Call, Strike 7.00 @ 0.30 (May 19th expiry)
• For the options period expiring May 19th, after additional new funds and nasty loss early this month, I will emerge with a measly 2% or so ROI.

Gut Check:

• Both stocks went down. Not as drastically as DNDN, but quickly enough that I missed the good prices yesterday -- especially RENN, which had a price of 0.55, which would have made a very tidy sale price.
• Prices were still going down today--looks like France/Europe election issues yesterday, and more Greece troubles early today. I took a chance that this might continue all day today, maybe even this week, and decided to take the prices above before time value ticked down even more even if share prices held sort-of-steady.
• With my usual bad luck, prices could jump back up after. Urgh.
• But my Trading Strategy isn't supposed to be about speculation! It's about seeing what's available now, and deciding to take it or not. And once I've secured a certain level of profit, I need to just let go and not regret. It is the stress of regrets that's taking a toll on me.
• Strange... Just checked now (0650h PST) and Google Finance shows PCX price gapped up at open. But QuesTrade had shown it ticking down at market open... Hmm...
• DNDN is now trading at LESS THAN $10! The company posted mild profit gains, and that was apparently just not good enough. Might be more scary times squeezing profit out of this next month... Now I'm glad I'm at a Strike 14.00 waiting for expiration.
• There's the possibility of buying that back and getting another Strike. I'm tempted to try it, even if it is speculation, though at a Strike of 12.00 it might be a safe bet, when the share price is ticking down toward $9.
• ROI for the month still in the positive, but only because of new cash. No more huge wins like the early lucky days of very volatile stocks, I guess. But still better than the 1% everyone's projecting. 

May Trades

Trades:

• Previous PCX Covered Call expired May 4th. ROI 1.29% on the $4,808 spent buying the 8 contracts.
• Queued Sell to Open 8x PCX Covered Call Strike 6.00, Limit 0.10, expiry May 11th
• Queued Buy 8x RENN at Limit 6.60.
• If filled, will do a Sell to Open 8x RENN Covered Call, Strike 7.00. Price was around 0.50 when the market closed on Friday. This would be a nice 7% return on the $5405 available cash in the account.

Gut Check:

• Decent return on a Weekly Option on the PCX. Price of the stock is going down, however. But even if it hovers and the option premiums are decent, then I'm still okay.

May Trades

Trades:

• Bought 3x YPF @ 14.28
• Sold to Open 3x YPF Covered Call Strike 15.00 @ 0.50, expiry May 19th

Gut Check:

• My first TFSA account buy. If I lose money here, I can't just top it up. Can't go into margin either, so there'll be more "idle money" in this account, making ROIs smaller compared to committed capital.

May Trades

Trades:

• Added 10,000 CAD to the Margin trading account, and 5,000 CAD to the TFSA account.
• Bought 8 contracts PCX @ 6.00
• Sold 8x PCX Strike 6.00 @ 0.15, expiry May 4th.
• On the $4,808 spent buying the 800 shares, this is 1.69% ROI if assigned (due to auto-assignment fees), 2.12% if the position expires.

Gut Check:

• Got the Weekly on the PCX because I wanted to have cash on hand for this month's conference calls for DNDN, PCX, and INVN. Price of PCX has been very volatile this morning. Hopefully it'll close this week at 6.00 or slightly above -- or at least not drastically low.
• Still feeling a bit anxious about my decisions after April, but I need to push forward.
• Still two and a half weeks left to make money. Hopefully I can turn things around and not feel anxious about making excessive amounts. The early months of 10% ROI were fortunate, especially when the benchmark returns for options is 1% per month. I need to concentrate on getting assigned, returning to cash, and still coming out ahead a few percentage points.
• I'm about 10,000 away from asking for Options Level 4, which will let me do cash-secured Puts. Looking forward to choosing trades more likely to end in a cash position at options expiry!