Friday, March 20, 2015

Financial Planning: Weekend Update - March 21

Positions on March 20, 2015 - Green Means "In The Money"

We've had a pretty volatile first week! Monday March 16 was a nice "up" day with the S&P 500 gaining about 1.25%. As a result, a few of my positions moved into "in the money" status, meaning that they are subject to being assigned.

Tuesday was pretty much flat, down 0.3% in anticipation of Wednesday's Federal Reserve policy statement.


Most of today's trading was dominated by fear - no one wanted to be caught too long if the Fed announced tightening. It wasn't too scary; the S&P fell 11.61 points from the open, bottoming out at 2061.23. The news from the Fed at 2:00 was exactly as expected: they deleted the word "patience" from the policy statement and the market took off gaining 38.27 points from the low. This resulted in eight of my twelve positions becoming "in the money". The laggards are Intel, Ford, Altria, and Diebold. Even so, every underlying except MO was up on the day. Had today been expiration I would have a net gain $11,127.20 or 3.41% and the pleasant task of re-allocating the bulk of my portfolio. But we've got 4 weeks and 2 days left until the real expiration...


A nothing day. Friday is options expiration.


Whee! more or less 1% gain in all the indices. As you can see from the positions chart above, 9 of my 12 positions are in the money. There wasn't really any news to fire off today's action.

Where We Stand

After Week 1 the portfolio is up 3.5% counting capital gains, option premiums, and dividends. This is a pretty remarkable result and will almost certainly not be sustained through April expiration.  With this many positions in the money there isn't much more room for gains.

I'm keeping an eye on six new companies. Emerson Electric (EMR) which has a 3.38% dividend and an active options market, Texas Instruments (TXN) with a 2.35% dividend and great options, Philip Morris (PM) a beaten down tobacco stock with a 5.14% dividend and excellent options. The last two are Con Ed (ED) with a 4.19% dividend and Nucor (NUE) with a 3.02% dividend and very active options. Last is SAFT, an insuramce company with a 4.72% yield but rather low options volume.

My thought is that I'm over exposed to oil and electric utilities. Depending on what gets assigned in April I may drop COP, PPL, and ETR and replace them with ED and NUE. The techs, INTC and DBD might get swapped for TXN and the insurance company SAFT.

This portfolio is not meant to be traded, but as long as it's just paper I can make mistakes, adapt, and diversify.

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