Thought I'd write up one that "got away" for laughs and see if
anyone had a similar experience.
I was repositioning the small cap portion of my investments in
December. Titan Industries, TITN, is a middle man company that
sells farm and construction equipment. They handle the paperwork
and get the product into the hands of the farmers or contractors.
Based out of West Fargo, N.D. but selling equipment in the US and
Europe. Five years out numbers look promising and I had the cash
available to start a position.
But I'm an Options guy now so... placed a CSP and see if I can
pull a few hundred out of the market to make my start in this
company better.
4 DEC 12 STO 2x TITN 12-12-22 22.50 CSP @ 1.45, APR 126%, net
$280.30
My notes say that there was volatility due to a lower than
expected earnings call. I placed the trade, got filled and THEN I
read that there was a greater than 20% short interest in the
company... a short squeeze would rally the stock and I wouldn't
get my stock put to me (I wanted to start the position). On Dec
6th, earnings came out and the stock jumped 6%. I still wasn't
going through my checklist and registering that you don't write
across an earnings release.
On Dec 14th, I felt that the stock was going to walk away from
me. So, I closed out my position:
14 DEC 12 BTC 2x TITN 12-12-22 22.50 @ 0.19... $231.05 for
ten days of being an air pirate (doing nothing in other words).
I then placed a trade an bought 200 TITN at 23.647 and began my
position.
Trip forward a couple of months. TITN runs up to 30 and finds
resistance in the 29s. I contemplated writing a CC at 30 as this
was a pretty fast and steep climb for a stock - it couldn't last
and should be monetized. HOWEVER, I read an article by a
respected individual in the investment community that was fairly
negative about selling covered calls and cash secured puts based
upon APR returns alone and ignoring the potential in company
growth. Selling your potential gains for short term
capitalization wasn't a sound investment plan per the author.
I folded. I didn't sell the covered call in spite of everything
telling at me that this climb was unsustainable and due to
reverse. Titan started to drop and collapsed all the way back to
a negative valuation (for me). If I had sold the call, I would
not have been exercised and I would still own TITN but with an
extra premium that would soften the blow of being a paper loss
right now. Titan is a five year stock for me and I expect to see
it appreciate or be bought out within that time frame. Lesson
learned. Sell a covered call on an unexpected rise or sell the
stock outright.
Good Luck can be defined as being open to taking opportunities
when presented.
Bad Luck is not answering the door when opportunity knocks.
Malcolm
Theresa H on
Malcolm,
Thanks for sharing. I appreciate the write up you did about Apple also. I had been wondering how you were doing with options since Apple stock fell. I didn't write Apple options but bought a dozen shares outright a few months ago and, of course, lost a couple thousand bucks on paper - so now I'm a bit chicken. I'm very impressed that you are able to make Apple options work for you. Awesome!
Theresa
On Apr 25, 2013, at 3:58 PM, Malcolm Myles wrote:
Hi Clubbers,
Thought I'd write up one that "got away" for laughs and see if
anyone had a similar experience.
I was repositioning the small cap portion of my investments in
December. Titan Industries, TITN, is a middle man company that
sells farm and construction equipment. They handle the paperwork
and get the product into the hands of the farmers or contractors.
Based out of West Fargo, N.D. but selling equipment in the US and
Europe. Five years out numbers look promising and I had the cash
available to start a position.
But I'm an Options guy now so... placed a CSP and see if I can
pull a few hundred out of the market to make my start in this
company better.
4 DEC 12 STO 2x TITN 12-12-22 22.50 CSP @ 1.45, APR 126%, net
$280.30
My notes say that there was volatility due to a lower than
expected earnings call. I placed the trade, got filled and THEN I
read that there was a greater than 20% short interest in the
company... a short squeeze would rally the stock and I wouldn't
get my stock put to me (I wanted to start the position). On Dec
6th, earnings came out and the stock jumped 6%. I still wasn't
going through my checklist and registering that you don't write
across an earnings release.
On Dec 14th, I felt that the stock was going to walk away from
me. So, I closed out my position:
14 DEC 12 BTC 2x TITN 12-12-22 22.50 @ 0.19... $231.05 for
ten days of being an air pirate (doing nothing in other words).
I then placed a trade an bought 200 TITN at 23.647 and began my
position.
Trip forward a couple of months. TITN runs up to 30 and finds
resistance in the 29s. I contemplated writing a CC at 30 as this
was a pretty fast and steep climb for a stock - it couldn't last
and should be monetized. HOWEVER, I read an article by a
respected individual in the investment community that was fairly
negative about selling covered calls and cash secured puts based
upon APR returns alone and ignoring the potential in company
growth. Selling your potential gains for short term
capitalization wasn't a sound investment plan per the author.
I folded. I didn't sell the covered call in spite of everything
telling at me that this climb was unsustainable and due to
reverse. Titan started to drop and collapsed all the way back to
a negative valuation (for me). If I had sold the call, I would
not have been exercised and I would still own TITN but with an
extra premium that would soften the blow of being a paper loss
right now. Titan is a five year stock for me and I expect to see
it appreciate or be bought out within that time frame. Lesson
learned. Sell a covered call on an unexpected rise or sell the
stock outright.
Good Luck can be defined as being open to taking opportunities
when presented.
Bad Luck is not answering the door when opportunity knocks.
Malcolm
Malcolm Myles on
Hi Theresa,
Thanks. I have no community here to share investment trials, so
it helps to put it out to the universe to keep me honest with
myself.
I would encourage you to be a proactive investor - especially with
Apple. I too have fear but I conquer it in every trade with the
knowledge that I've garnered through Cool Club - I listen to old
podcasts repeatedly - and my experience. Wisdom will come
eventually.
One other piece of information - you either have your cash or you
own stock in one of the greatest companies in the world. Either
way, the cash or Apple stock has no, absolutely no feelings for
you at all - so return the favor. I don't fear my Apple position
and I am also not greedy of my Apple position. I'll take what I
feel is reasonable and be happy.
Another nugget, the premiums jump into the stupidsphere the day
before and day of earnings. I sold my CC on Apple for 2.85 on the
day of earnings. It was less than a buck on the preceding
Friday. I just went through earnings on my Amazon position. I
had a cc position already at $2.56 and it went to $7 yesterday
afternoon. This morning, $0.15. There is serious money to be
made on CC across an earnings IF YOU are willing to give up
"potential" gains. Every week, or month, pull a little out.
Every three months, wait until earnings and decide if you want to
pull a lot out and potentially liquidate or sit back and continue
to let it ride.
Again - Apple or your money doesn't fear you... you shouldn't fear
them.
Jump in, the water is fine.
Malcolm
On 4/25/2013 4:08 PM, Theresa H wrote:
Malcolm,
Thanks for sharing. I appreciate the write up you did about
Apple also. I had been wondering how you were doing with options
since Apple stock fell. I didn't write Apple options but bought
a dozen shares outright a few months ago and, of course, lost a
couple thousand bucks on paper - so now I'm a bit chicken. I'm
very impressed that you are able to make Apple options work for
you. Awesome!
Theresa
On Apr 25, 2013, at 3:58 PM, Malcolm Myles wrote:
Hi Clubbers,
Thought I'd write up one that "got away" for laughs
and see if anyone had a similar experience.
I was repositioning the small cap portion of my
investments in December. Titan Industries, TITN, is a
middle man company that sells farm and construction
equipment. They handle the paperwork and get the
product into the hands of the farmers or contractors.
Based out of West Fargo, N.D. but selling equipment in
the US and Europe. Five years out numbers look
promising and I had the cash available to start a
position.
But I'm an Options guy now so... placed a CSP and see
if I can pull a few hundred out of the market to make
my start in this company better.
4 DEC 12 STO 2x TITN 12-12-22 22.50 CSP @ 1.45, APR
126%, net $280.30
My notes say that there was volatility due to a lower
than expected earnings call. I placed the trade, got
filled and THEN I read that there was a greater than
20% short interest in the company... a short squeeze
would rally the stock and I wouldn't get my stock put
to me (I wanted to start the position). On Dec 6th,
earnings came out and the stock jumped 6%. I still
wasn't going through my checklist and registering that
you don't write across an earnings release.
On Dec 14th, I felt that the stock was going to walk
away from me. So, I closed out my position:
14 DEC 12 BTC 2x TITN 12-12-22 22.50 @ 0.19...
$231.05 for ten days of being an air pirate (doing
nothing in other words).
I then placed a trade an bought 200 TITN at 23.647 and
began my position.
Trip forward a couple of months. TITN runs up to 30
and finds resistance in the 29s. I contemplated
writing a CC at 30 as this was a pretty fast and steep
climb for a stock - it couldn't last and should be
monetized. HOWEVER, I read an article by a respected
individual in the investment community that was fairly
negative about selling covered calls and cash secured
puts based upon APR returns alone and ignoring the
potential in company growth. Selling your potential
gains for short term capitalization wasn't a sound
investment plan per the author.
I folded. I didn't sell the covered call in spite of
everything telling at me that this climb was
unsustainable and due to reverse. Titan started to
drop and collapsed all the way back to a negative
valuation (for me). If I had sold the call, I would
not have been exercised and I would still own TITN but
with an extra premium that would soften the blow of
being a paper loss right now. Titan is a five year
stock for me and I expect to see it appreciate or be
bought out within that time frame. Lesson learned.
Sell a covered call on an unexpected rise or sell the
stock outright.
Good Luck can be defined as being open to taking
opportunities when presented.
Bad Luck is not answering the door when opportunity
knocks.