The Starving Artist (Canada)

I'm not dead

2015-05-30T21:13:00.001-04:00

Two reports generated from my Interactive Brokers trading account.

Year to date:

Since Inception:

Stay hungry my friends

fallen off that wagon

2015-03-08T10:58:00.004-04:00

The more I trade, the less time (and inclination) I have to blog.

That is all.

I'll hopefully be able to post monthly summaries going forward.

Stay Hungry my friends.

Trade Summary: Booze and "burgers"

2015-01-23T21:38:00.004-05:00

Closed 2 positions today: MCD (McDonalds) and DEO (Diaego)

The MCD trade was closing the call spread I had added in addition to my "standard" put-spread. I'm still holding the put spread.

The call spread was opened for a credit of $0.33/c and closed for a debit of $0.078.
Duration 43 days
77% capture (after commissions)
42% rate of return (annualized)
5% Return on Equity

DEO: (no further positions remain, will re-establish on the next bad-news or down market day)
Bull Put spread:
Opened for a credit of $0.75/c
Closed for a debit of $0.25/c
61% capture (after commissions)
167% ROR
11% ROE

Stay HUNGRY my friends.

Trading summary: bring home the bacon

2015-01-22T19:31:00.001-05:00

Today's move: I closed a spread on YUM brand foods. I've talked in length about YUM before. So I'll just cut to the chase:

April $65/60 bull put spread (closed with the opposite bear spread)
Position open: Dec 18th 2014
Position closed: Jan 22th, 2015
Duration: 35 days
opened for a credit of $0.88/c
closed for a debit of $0.38/c

51% capture of premiums (after commissions)
11% Return on Equity
116% Rate of Return

$232.20 profit.

Stay hungry my friends.

Trade summary: on-sale!

2015-01-18T11:40:00.001-05:00

I don't have "the brick" today on this trade... I was running out the door to a gig when I saw the opportunity.

With the Swiss Central Bank deciding to un-cap the exchange rate from the Swiss Franc vs. the Euro, there was a trememdous pop in the value of the Swiss Franc, and corelating crash in the value of the swiss stock market. Relatively speaking valuations stayed the same, but it doesn't look good if you're a Swiss national with all of your holdings in Francs.

On that news, FX brokers (foreign exchange brokers) might have had a client or 12 who had been over-leveraged and the resulting changes in exchange rates might have incurred margin calls and/or delinquent accounts requiring the FX broker to eat the loss.

As a result, IBKR (Interactive Brokers) was sympathetically down 25% from the previous day in pre-market trading.

Interactive Brokers however has a very strict margin policy: If you're a client (which I am) and you do something that falls afoul of their margin requirements, they automatically and mercilessly liquidate your account positions until you are compliant. Thus, they have very little risk of having a loss in this type of situation.

So on no fundamental change to the company, I added to my position for about $4.50 cheaper than the previous close.

Trading during the day snapped back up to almost where it was the day before... Market sentiment did make it close a little bit down from the previous, but all within a reasonable range.

IBRK is an interesting play in rough markets. Clients often trade MORE during market slides so their revenues go UP from the increased trading activity.

My position of IBRK was originally only 100 shares. I now have 200 with an average price of $27.2625. As of Friday close, it's $28.05 So I'm looking at a whopping unrealized gain of $155.50 USD.

As usual, I'm going to start writing covered calls on this position 1 month out, $1-2 higher than my average price. With the hopes lowering my cost basis and never being assigned.

If calls look like they will be assigned, I might roll up and away, or I might just take the assignment and write some new naked puts to re-aquire the position.

The only downside of owning them as a non-US person: the IRS does have sticky fingers and holds on to 15% of the dividend.

Stay hungry my friends.

Trading summary: busy day

2015-01-12T21:45:00.001-05:00

The price of oil is still falling like a stone, but my heart is NOT made of stone. I have started dabbling in oily and oil correlated positions. The price of oil may very well have a few more percent of downside to go, but even the Saudis said they will start to panic at $40 per barrel.

Here's my trading brick of the day:

1st up: USO - United States Oil fund. It's an ETF that's pegged to the price of oil. I purchased 100 shares and sold a covered call to lower my cost basis.

Average price: $17.60 (including commissions). Hopefully oil will stabilize soon and this will bounce up a bit. Not before my calls expire worthless though!

Currently I'm long 200 shares of USO with a covered call with a $21 strike and another (opened today) with a $18 strike. My average cost on USO is $18.80. (Not yet adjusted for call premium)

2nd up: SNDK - Sandisk. The company that makes memory cards and solid-state hard-drives for computers.

I've traded this on and off over the years and today they revised their quarterly guidance DOWN by 4% but the stock plunged 14%. That seems like just "a bit" of an over-reaction to me, so I opened 2 positions on 2 different months. Very juicy premium because of the bad news.

3rd: Disney - Closed a successful position.
49% caputre
74% Rate of return
14% return on capital
Position open 70 days.

4th: CPG - Cresent point energy
This is a position I recently entered sadly before the oil price implosion. My average price on the stock is $35.50 so I sold 2 lousy covered calls for $38 each. I'm chipping away at my cost basis and the dividends haven't been cut (yet) and that pays another $46 monthly on my 200 shares.

So I'm still grinding out gains, one day at a time.

Stay HUNGRY my friends!

Trading summary: holy market implosion batman!

2015-01-05T20:41:00.004-05:00

Today was ugly if you're a long-only investor. Unless you had already gone to mostly cash and are now starting to buy into some choice picks. Even the hardened energy/oil bears are now changing their tune saying "it can't go any lower" and surprise surprise, it does.

But enough of my 2-cents worth which nobody cares about. Here's the brick for today's trades:

1st move of the day: NEW position
ZMH - A healthcare company that makes replacement hips and such.
2 contracts, JUNE expiry on a $100/95 bull put spread
$0.74 credit ($74) per contract
ROC 17% (for worthless expiry)
ROR 37% (for worthless expiry)
Max loss $426 per contract
If necessary, I'll take assignment if it's in the range at expiry.

2nd move of the day: rolling the front month of a calendar spread
rolling trade in progress. Rolled out to the next quarterly for a $1.70 credit per contract. So far, I'm still in perfect shape with the stock price being very close to my strike. If it goes up, I'll start adding a bit of risked capital. However at this point, now that I have paid for the position, my additional risk is exactly $0 because my long and short puts are the same strike.

3rd move: MDA - A Canadian Aerospace company
3 contracts, APRIL expiry on a $86/82 bull put spread
$0.60 credit per contract
ROC 17%
ROR 58%
Max loss $340 per contract
Again, this one I wouldn't mind owning, so I'll take assignment at expiry if it's in range.

Stay HUNGRY my friends.

Trade summary: boozy new year

2014-12-30T14:32:00.001-05:00

A small trade on DEO Diageo LLC. (Purveyors of fine boozy spirits world-wide)

The brick:

Details:

2 contracts DEO FEB $110/105

Current stock price $114.50 (at time of trade)

Max profit $146.83

Max loss (1000-146.83) $853.17
Days to expiry: 52

Projections for worthless expiry:

ROC: (return on capital) 17%

ROR: (annualized rate of return) 121%

Approximately 5% downside protection.

In the spirit of new years' celebrations with champagne, this is my festive trade of the season.

Cheers!

Stay hungry my friends! (And thirsty... buy DEO stuff!!!)

Trading summary: I'm a blogging slacker

2014-12-18T11:30:00.000-05:00

Catching up:

I made my $MCD position a short iron condor by adding a bear call spread on top:

And today I added spreads on YUM and XOM. YUM has been good to me. My short strike is lower than it's been in the past 2 years. Should be easy to hold.

XOM however, I'm hoping oil is near it's bottom. But it could fall more. That said, the premiums are rich considering how little XOM has moved in response to a 45% crash in the market price.

Also shown are closing some short puts and a cover call. Lost a bit on the CC. I want to keep the shares and I don't want to have to roll it forever. The premiums on this particular REIT are SUPER thin and very illiquid. I was hoping to juice my returns, but I'm impatient and didn't want to risk losing more than $20. ($23 including comms).

The AVO short puts worked out nicely for an annualized ROR of 18%.

Stay HUNGRY my friends.

Trading summary: driving away with the profits

2014-12-08T21:54:00.000-05:00

Today I closed 2 bull put spreads on Magna International.

Here's the brick:

With the price of oil crashing, why would I be exiting the auto-sector? My moves had done well, and faster than I had expected. And to top it all off, with the energy market doing what it's doing, I need some capital to defend a position I took on 2 weeks ago, and hopefully make some choice picks when the market finds a bottom.

CLOSED: MG - Magna International
5 contracts $MG $100/98 bull-put-spread MAY
Position open: 29-oct
Position closed: 8-dec
Position open: 40 days
Maximum Premium : $245
Maximum loss: $755 (1000-245)
Closed @ 46% capture ($120)
Yield on risked capital: 16%
Representing an annualized yield of 146%

CLOSED: MG - Magna International
5 contracts $MG $105/100 bull-put-spread FEB
Position open: 17-sep
Position closed: 8-dec
Position open: 82 days
Maximum Premium : $345
Maximum loss: $2155 (2500-345)
Closed @ 56% capture ($200)
Yield on risked capital: 9%
Representing an annualized yield of 42%

Stay HUNGRY my friends.

Trading Summary: crappy food, overpriced coffee, and a brokerage

2014-12-05T16:19:00.004-05:00

Today: Closed 3 positions. YUM Brands, Starbucks, and Interactive Brokers.

Here's the brick:

CLOSED: IBRK - Interactive Brokers
1 contract Jan $27 Puts (naked puts)
Position open:20-novPosition closed: 5-dec
Position open: 15 days
Maximum Premium : $89.61
Maximum loss: $2610.39 (2700-89.61) (if the stock went to ZERO)
Closed @ 49% capture ($44.27)
Yield on risked capital: 1.7%
Representing an annualized yield of 40%

Full disclosure: this is my brokerage: I highly doubt they would be ZERO by January... Entirely unlikely. Thus the max loss is theoretical only. And yes, for those of you who see that "Comm" item of $0.34, that's how much my commission was to trade this. Sure beats EVERY OTHER brokerage in Canada. This move would have cost me $11.24 ($9.99+1.25) at my old brokerage.

CLOSED: SBUX - Starbucks Coffee
5 contracts April $70/67.50 Bull put spread
Position open:31-octPosition closed: 5-dec
Position open: 36 days
Maximum Premium : $235
Maximum loss: $1015 (1250-235)
Closed @ 64% capture ($155.40)
Yield on risked capital: 15%
Representing an annualized yield of 158%

Huge positives for Starbucks. Time to take my money, and buy a coffee.

CLOSED: YUM - Yum Brand Foods
5 contracts April $65/62.50 Bull put spread
Position open:25-aug
Position closed: 5-dec
Position open: 103 days
Maximum Premium : $265
Maximum loss: $985 (1250-265)
Closed @ 64% capture ($169.59)
Yield on risked capital: 17%
Representing an annualized yield of 62%

Yum has recovered from it's "floor chicken" fiasco. It's got it's mojo back, so it's time for me to exit my position and re-deploy into something else.

Stay HUNGRY my friends.

Trading summary: Cleaning up

2014-12-03T12:50:00.002-05:00

Colgate Palmolive - A consumer staples company.

The brick:

5 contracts CL May 2015
Max profit $282.10
Max loss (2.5k-282.10) $2.2k
Days to expiry:165

Max Yield on risked capital: 13%

Projected annualized gain for worthless expiry: 28%

This is perhaps not the best timed move, but I've had so many positions come off (and come off EARLY) so I wanted to get some more theta decay going in my account. (Premium erosion over time)

I've been in and out of $CL a few times already in my new account, so it seemed like a good choice to get back in.

Also, I CLOSED my short puts on IPL (Inter Pipelines). It had moved to nearly 50% max profit since YESTERDAY. While not realistic, that represents an annualized yield of 1373%. I was hoping for an assignment. So I'll take my profit and try again the next down-day for oil.

In review, some readers have tweeted that my risk/reward seems crazy low for these moves. And by the numbers, it does look that way. However, I'm doing "defined risk" trades so I have an absolute maximum loss. If you buy a stock or sell short puts, your losses can be potentially MUCH larger than mine. Additionally, if I were selling short calls, or short strangles, then the losses are theoretically INFINITE.

Stay HUNGRY my friends.

Trading summary: going Looooooooooonnnng

2014-12-02T16:13:00.002-05:00

To further account transparency for all of my 3 readers, I will start updating all of my moves to my trading account, and perhaps talk vaguely about the moves I'll do in my TFSA, RRSP, and sons' RESP. (Think tax free, tax deferred, and education accounts for you non-kanuckistan residents)

Here's the brick:

The move: STO (sold to open) a $32 Put on IPL (Inter pipelines - An oil pipeline company).
Credit $1.15 ($115-$1.50 commission) $113.50

NB: This put is ITM (in the money). I am hoping to take assignment of IPL @ $32/s.

With the premiums collected that would give me a cost base on IPL of $30.88. As the stock closed today @ $31.32, that's not too bad. The stock was trading at $31.26 when I made my move.

If IPL goes up above $32 by December 19th, I'll walk away with my $113.50. If this is the case, that would represent a 13% annualized yield.

Stay hungry my friends.

Trading Summary: Apples and no oranges

2014-12-01T15:55:00.002-05:00

I added a new position of Apple today. I was thinking of adding another because I often get the feeling I don't trade enough (don't make enough attempts), but I had second thoughts and decided to leave it at that.

The brick:

5 contracts AAPL (Apple Computers) April 2015
Max profit $393.09
Max loss (2.5k-393.09) $2.1k
Days to expiry: 135

Max Yield on risked capital: 19%

Projected annualized gain for worthless expiry: 50%

Why did I make this move? I watched the algos initiate HUGE selling on apple. It dropped very quickly so after the dust started settling I found a reasonable trade (for me) on AAPL. The premiums jumped up a bit as a result of the bot-selling.

For this trade to be in danger, Apple will have to fall MORE than 16%.

I had recently closed an April Apple spread, but it's strikes were MUCH lower. April is still a long way away so I have time to wait out any current market instabilities.

Stay HUNGRY my friends.

Trade summary: chips chips chips, and bailing out.

2014-11-28T18:38:00.000-05:00

Today's trades: Closing a winner & exiting a position as I had grown bored of waiting for.

Here's the brick:

This morning I decided to exit my position of GM - General Motors. It had bobbled up and down since I had opened the position. The market crash (and recovery) made both strikes go completely in-the-money and then back out again. I've lost interest waiting for it, as typically my moves come to fruition in a little less than 1/2 of the time from open to expiry.

CLOSED: GM - General Motors
5 contracts DEC $32/30 bull put spread
Position open: 18-aug
Position closed: 28-nov
Position open: 102 days
Maximum Premium : $206.11
Maximum loss: $793.88 (1000-206.11)
Closed @ 24% capture ($56.11)
Yield on risked capital: 2%
Representing an annualized yield of 9%

As for Qualcomm (QCOM) It worked much faster than anticipated. The stock had cratered on some lawsuit type news. But as they sell chips to EVERYBODY EVERYWHERE, (and that this type of suit is frequent, and easily dismissed) I made my move.

CLOSED: QCOM - Qualcomm
5 contracts DEC $65/60 bull put spread
Position open: 11-nov
Position closed: 28-nov
Position open: 17 days
Maximum Premium : $318.01
Maximum loss: $2181.99 (2500-318.01)
Closed @ 77% capture ($243.01)
Yield on risked capital: 11%
Representing an annualized yield of 229%

Now THAT's more like it!

Stay HUNGRY my friends!

Trade Summary: It's THE PHONE COPS MAN!!!

2014-11-25T14:36:00.002-05:00

No, I'm not Dr. Johnny Fever, but I did decide to take a snoozer position in T - AT&T.

The brick:

5 contracts T April 2015
Max profit $172.10
Max loss (1000-172.10) $827.90
Days to expiry: 145

Projected annualized gain for worthless expiry: 19%

Yeah, it's going to be boring. T hasn't touched $32 for over 9 months. Will probably take it's sweet time to hit my target.

Stay HUNGRY my friends.

Trade report: seaching complete!

2014-11-24T15:55:00.001-05:00

Today one of my GTC (good till cancelled) orders closed my Google spread for December.

Here's the brick:

CLOSED: GOOGL - Google
5 contracts DEC $500/495 bull put spread
Position open: Oct 24
Position closed: nov-24
Position open: 31 days
Maximum Premium : $284.06
Maximum loss: $2215.94 (2500-284.06)
Closed @ 71% capture ($209.06)
Representing an annualized yield of 107%

I'll be looking to re-enter new spreads in the future on any upcoming days of market retreat.

Stay HUNGRY my friends!

Trade Summary: anticipated success and re-entry, plus a new position

2014-11-20T14:07:00.001-05:00

My $14 short puts in AVO - Avigilion Inc (security cameras n' stuff) are looking like they will expire worthless tomorrow, as the stock is trading today at $17.80.

So I added a new position of short puts on them with a January expiry. I hope this position will again expire worthless, although the number of puts is small enough that I would begrudgingly take assignment.

Additionally I added 1 measly short put on IBRK - Interactive Brokers. It's my brokerage. Why not own some? Plus, with their "take no prisoners" approach to dealing with customer margin-calls, they will no doubt generate MORE income during market corrections and market crashes. So its earnings should be pretty crash-resistant. This is why I sold an ATM (at-the-money) call in the hopes I would get assigned.

Using an ATM short put with Interactive Brokers is CHEAPER than just buying the stock outright. Here's the breakdown:

Sell the short put and collect the premium. Take the assignment (a $0 cost at IBKR) and hold the stock. I plan on holding this one forever. Hopefully one day I'll have enough shares of IBKR so the dividends will pay for all the trading fees I spend each month. (Looks like I'll need about 2000 shares) But right now, that would be "considerably" overweight to have a 54k position. (Current share price $27)

Here's the brick:

Stay HUNGRY my friends.

recap: why do I trade spreads?

2014-11-19T11:36:00.003-05:00

I've had a few comments go by questioning my methodology when deciding on a decent risk/reward for my positions. In my usual spirit of brow-beating, all of you naysayers are woefully uninformed. (Read: WRONG).

So for those of you who just buy stock: what do you need to make money?
1. you need the stock to go up and then you need to SELL it.
2. you need the stock to pay a dividend if it doesn't go up.
3. if the stock goes down, you're boned.

How much can you lose? ALL OF YOUR MONEY!!!

So what happens if I do one of my spreads on the same stock?
1. if the stock goes up, I make money
2. if the stock goes nowhere I make money
3. if the stock goes down 10-15% I MAKE MONEY
4. If the stock goes down MORE than 20% I can "kick the can down the road" if I expect the stock to recover.
5. if the stock goes to ZERO, I only lose a maximum of $100-500 per contract. (Depending on the "width" of the spread.

Additionally, I do NOT have to sell the position to make money. It will EXPIRE on it's own (if I choose not to close it) if the stock has not fallen more than 15%

So my risk/reward is VASTLY superior to the buy and hold only.

Stay HUNGRY my friends.

Trade summary: Apple

2014-11-19T09:23:00.000-05:00

I forgot to blog this on Monday. Anyway, it was time for me to close my last Apple spread. It had done it's magic.

Here's the brick: (No commission shown it cost $7.89)

CLOSED: AAPL - Apple Computers
5 contracts APRIL 2015 $85/80 bull put spread
Position open: sep-4
Position closed: nov-17
Position open: 74
Maximum Premium : $512.19
Maximum loss: $1987.81 (2500-512.19)
Closed @ 78% capture ($412.19)
Representing an annualized yield of 97%

I'm still bullish on Apple, so I'll be looking to add a new position 3-6 months out with higher strikes.

In other news, it looks like I'm running an average annualized yield of 40-45%. I'm unable to give you an exact number so far because my account wasn't even fully funded until last month. Once I get more than 6 months of data in the new account (look for it 5 months from now) then I'll be able to give you the reports that show my rate of return.

Stay HUNGRY my friends.

Trading summary: greasy computers

2014-11-14T14:06:00.000-05:00

The last couple days have not presented me with any opportunities except perhaps for today's trade. I chose to be super conservative so my strikes are low and my risk/reward is right on the bottom of my acceptable limit.

Today's moves: XOP - SPDR S&P Oil & Gas Explore & Prod. (ETF)

It's oil, and it's liquid. (Both the product, and the trading).

MSFT - Microsoft. 85% chance you're using it's products right now.

Here's the brick:

So here's the breakdown:

5 contracts XOP JAN 16, 2015
Max profit $156.49
Max loss (1000-156.49) $843.51
Days to expiry:63

Projected annualized gain for worthless expiry: 39%

5 contracts MSFT FEB 20, 2015
Max profit $222.10
Max loss (2500-222.10) $2277.90
Days to expiry:98

Projected annualized gain for worthless expiry: 36%

In other news, since I'm not using all my money all the time, I don't get annualized returns like my past few trades all the time. That said, so far so good. I've been averaging 35% annualized returns for the past 3.5 months my new account has been open with Interactive Brokers. Most of my moves are 3-6months out though, so this number should increase a little over time.

I'll post more charts in the future as right now, a 3 month chart with only 3 data points isn't all that useful for hammering home my point: You most certainly CAN beat the index! And with hardly any time, or huge amounts of money to push around.

Stay HUNGRY my friends!

Trading Summary: closing more winners

2014-11-13T17:41:00.003-05:00

As it's getting harder and harder to come up with entertaining, yet brow-beating, denigrating, and insulting commentary to attempt to ~~shame~~ convince you to trade options through ~~humiliating~~ encouraging you. So in lieu of any of that, here's the daily round up.

I didn't trade yesterday, hence no post. But today I closed 2 winners.

Here's the brick:

NB: bear spread is the INVERSE of the bull spread. (buying the bear spread closes the bull spread)

CLOSED: DIS - Disney
5 contracts Dec $82.50/80 bull put spread
Position open: Oct-8
Position closed: Nov 13
Position open: 36 days
Maximum Premium : $232.69
Maximum loss: $1017.31 (1250-232.69)
Closed @ 69% capture ($162.69)
Representing an annualized yield of 150%

CLOSED: MA - MasterCard
5 contracts Dec $65/60 bull put spread
Position open: Sep 11
Position closed: Nov 13
Position open: 62 days
Maximum Premium : $326.71
Maximum loss: $923.21 (1250-326.79)
Closed @ 74% capture ($251.79)
Representing an annualized yield of 65%

Stay Hungry my friends!

Trading report: Trying to close some winners, and a NEW position - chips chips and chips

2014-11-11T12:22:00.001-05:00

Currently on the board are orders to close spreads on Mastercard, Apple, and Google. This page will be updated if the orders fill.

After a few days of "digestion" on the news that QCOM is facing some lawsuits I made another move. Same strikes as my current position, but with a shorter duration.

Here's the brick:

So here are the opening numbers:
5 contracts
Max profit $317.70
Max loss (2500-317.70) $2182.30
Days to expiry: 66

So there you go! This is on the low side of my target for risk/reward, but the duration is shorter than I normally do. If this expires worthless in 66 days, it will represent a 81% annualized return.

Stay HUNGRY my friends!

Trading summary: Drugs and burgers

2014-11-10T12:10:00.001-05:00

Today's trades: closing 2 spreads. I didn't stick to my target goals. But with the amount of time left on the contracts, it wasn't worth holding them for the last few pennies.

So, here's the brick to see the closing times, commissions and prices!

NB: (as always) buying a BEAR put spread closes the corresponding BULL put spread.

PFE - Pfizer
5 contracts Jan 2015 $28/26 bull put spread
Position open: Aug 27
Position closed: Nov 10
Position open: 75 days
Maximum Premium : $175.28
Maximum loss: $824.72 (1000-175.28)
Closed @ 67% capture ($121.28)
Representing an annualized yield of 67%

MCD - MacDonalds
5 contracts Dec $87.50/85 bull put spread
Position open: Aug 19
Position closed: Nov 10
Position open: 83 days
Maximum Premium : $141.01
Maximum loss: $1108.99 (1250-141.01)
Closed @ 59% capture ($91.01)
Representing an annualized yield of 34%

Stay HUNGRY my friends!

Trading update: Banking on America

2014-11-06T20:29:00.002-05:00

I closed a short-put position. (Buying them back)

BAC - Bank of America
$17 Nov 21 expiry.

Opened @ $0.70 (opened Oct 15th)
Closing @ $0.13 (closed Nov 6th)

81% capture

My apologies to my readers who are option-novices. This might seem a little cryptic. I won't be trading tomorrow... 3 day weekend!

Stay hungry my friends!