My income statement
My main investment goal is to boost my "passive" income over time, so I'm going to try to post monthly charts showing the growth in my portfolio income.
My strategy includes long positions in dividend paying stocks, covered call writing and cash secured (or margin secured) put writing. Going forward I'll adjust my strategy as I see what works and what doesn't, and as I learn more about options and the market in general.
For record keeping, I record dividends when they appear in my account, and I record income from option sales on a straight line basis over the life of the option (If I sell an option on November 30 with a January expiry, the income is proportionally attributed to December and January).
If I sell an option or it is exercised for a loss, I'll count it against income if and when the loss is realized (ie if I sell a put and it gets assigned for a loss, I hold and sell calls so income continues to flow. If a call is assigned below the strike price of the assigned put, the difference will count as negative income).
I've been recording dividends since March 2010 and Option writing since June 2011. Hope this gets some interest and generates some discussion.
Here's where I stand currently. I'm looking to grow both my option and dividend income substantially over time.
Also, what's the best way to get charts/graphs from excel into a post?
You are missing the Y-axis, Dmoney
Whenever I have posted something from Excel on the forum, I have done screen print > Save as JPG > Upload to flickr or similar site > paste link.
Originally Posted by Dmoney
Not sure if this is the best way...takes about 2 - 3 mins. I think
Musta slipped my mind . It starts from a VERY low level though so the first months are misleading. When I get a bit more history behind me I'll cut them off so it doesn't make me look like Buffett.
Originally Posted by HaroldCrump
I did the same and it's a little bit of a pain. Oh well, that's life.
Originally Posted by HaroldCrump
Updated with a Y-axis, just for you Harold . That and I guess it's always more interesting with numbers. I also included my latest trade.
Sold 5 puts on Telus today. Jan 54 strike price. Want to buy Telus for yield and some growth opportunity, but figure that by selling puts until I get assigned I can maximize my yield. I'll miss the December dividend ($0.58) but instead got $0.93 per share for the puts.
Based on today's close of $55.67, my annualized yield is 13%. Will roll over the put in January if I don't get assigned, or write the covered call if I do.
Oh oh.. The secret is out on how profitable options are...
Let's hope so. Only 6 months in so it's a little to early to tell. Will compare my returns with simple buy/hold to see how I do at year end.
I have a similar strategy in my portfolio that has been running for longer to verify the outcome.
Though we might differ in our buy in point. I have some TA to determine the strike price. Don't know about you.
I wouldn't quite call it TA, but I consider general market dynamics, a given stocks gyrations relative to the market, timing of dividend dates, sensitivity to global events (oil prices/euro crisis/CAD$ etc.). I give the charts some consideration, but don't feel like they are going to tell me too much.
I mostly look to options that give me a potential return with enough premium to be happy with only the premium, but enough room for capital gains to not be disappointed if the stock runs up. I don't yet have a strategy for rolling ITM options over, and am debating whether I should look into it more.
How successful have you been over what period of time? What strategies do you use and how do they differ from what I've laid out? Any recommendations or pointers?
This is from a basic two sigma deviation bolinger band. + Avoidance of selling when the price is near a channel top or historic resistance level.
I managed to reach 25% this year with some added TA. Theoretically, the new one should give me 50% return per year, but my other half of the portfolio is not currently online. i.e. it is waiting for a long term option to expire.
My accounting is also different from you. I only book profit on the month when the option expires and I mark to market everything. It is important not to disillusion yourself especially with derivatives. It is the difference between GS and Lehman.
Last edited by Causalien; 2011-12-13 at 04:20 AM.
I'll likely include MTM for my full portfolio at the end of each month. I want to highlight my realized income from the portfolio, so would only include losses that are realized in this analysis. I'll be doing net worth or portfolio performance updates that will fully reflect everything that's going on. So far have only had one losing option position which I haven't solidified and I continue to earn income on. If/when I sell for a loss, I'll offset it against income in the applicable months (likely spread the loss over the period since being assigned).