Scalper1 News
This portfolio requires ongoing attention and management. We must justify the extra time invested by producing solid gains. Investing small is imperative in this portfolio. We keep diversified and our investing automatic to control fear and greed. We were put shares of (NYSE:GDXJ) & (NYSE:UNG) over the Christmas. We will monitor these closely and sell covered calls when the opportunity arises. It’s good to be back after the break and I want to wish everyone a very happy new year and let’s work together to ensure 2015 is a very profitable year for all of us. I hope each and every one of you will pick up some ideas and strategies from our 1% portfolio as we march into 2015. We have called this the “1% portfolio” so that the focus is on position size. I understand that it is very difficult for a portfolio to have 100 different underlyings but this portfolio always strives to increase the amount of positions as this has many distinct advantages. As we are starting the year off, let’s go through how this portfolio is set up and also where we are exactly with the 1% portfolio after the Christmas break. First of all this is an income portfolio. Our goal as income investors is to make money every month. We do this through option selling (puts and calls) and dividend pay-outs. This portfolio requires ongoing management because we monitor when an underlying has earnings, when it pays its dividend, when option premium is inflated and obviously the price action of the underlying. If you are looking for a portfolio that it almost completely hands off, then this portfolio is not for you. We are looking for above average gains – at least 25% on our money every year. We need at least this to justify the time we invest in our portfolio management. Investors who don’t want to actively manage their portfolios should just buy some good blue-chips stocks and collect the dividends every quarter as this strategy should overtime give you 7-10% on your money but we want more and the strategies below is how we do it. Firstly we keep our positions very small. Selling covered calls is a good strategy when there is rich option premium in the underlyings but greed creeps in when the underlying rallies hard. When emotions get involved, trading can get reckless. We control this by keeping our positions small and staying diversified. You are never going to “miss” a windfall when you are small and also one position can’t bankrupt you if you remain small in your portfolio. Nevertheless having multiple positions brings its own complexities. When investing small and investing for income, more time must be invested and also we must research the fundamentals of more underlyings. This is where an investor could slip up in this type of portfolio. Instead of doing thorough due diligence, an investor may open a position in an underlying just to collect a dividend which is not what we advocate here. Everything must be lined up properly for this portfolio to be profitable especially the fundamentals of the respective underlying. Secondly in order to collect income, we must sell at a profit. Therefore again when we open option, stock & ETF positions, we put in automatic orders (Good Till Cancelled) to collect income. It is all automatic and we put in these orders at order entry. These orders are working 24/5 for you and their sole aim is to collect income. Moreover these orders take the fear and greed elements out of your trading. We trade on logic not on emotion. When investing in ETFs , we are extremely mindful of where we are in all asset classes. Below is a list of where we believe we are currently in these asset classes. We diversify as much as we can. 1. Agricultural commodities. Corn, Wheat and Sugar are extremely depressed on a historical basis. We will be taking bullish positions in these when the opportunity arises. 2. Precious Metals – Again oversold, especially the mining sector. We will be taking bullish positions in these when the opportunity arises 3. US Equities – Overbought on a historical basis. We only will be going long on our selected blue chips at these levels (Stocks that have flourished historically). If we get a sharp correction, we will add more equities to the mix. 4. Real estate. We believe we are nearing a top in this asset class. We will not be going long here. 5. US Bonds. We believe again that bonds are overbought and are definitely due a correction. We are mindful that this correction may not take place for a substantial period of time. Nevertheless we will not be going long as the risk does not justify the reward at these levels. We made some profits on Coca-Cola (NYSE: K ) over the Christmas period and we also got put stock such as (NYSEARCA: GDXJ ) & (NYSEARCA: UNG ). We will wait until these recover somewhat before we sell some covered calls. We never should have realized losses in this portfolio as we never sell our underlyings at a loss. All we should have should be realized gains and unrealized gains or losses. Updated Portfolio (02-01-2015) Open Positions (Position size kept Ultra Small) Underlying Strategy Result GDXJ – 19/11/2014 Sold 25-DEC26 Naked Put (Now Long Stock) Open UNG – 20/11/2014 Sold 21-DEC26 Naked Put (Now Long Stock) Open USO – 25/11/2014 Sold Jan02-27.5 Naked Put Open USO – 10/12/2014 Sold Jan16-22 Naked Put Open MCD – 17/12/2014 Sold Jan15-95 Covered Call Open KO – 11/12/2014 Sold Jan23-43.50 Covered Call Open CVX -19/12/2014 Bought Stock 19/12/2014 Open CORN – 15/12/2014 Bought Stock – 15/12/2014 Open GDX Bought Stock 09/12/2014 Open MCD Bought Stock 25/11/2014 Open KO Bought Stock 25/11/2014 Open K Bought Stock 25/11/2014 Open TBT Bought Stock 28/11/2014 Open KOL Bought Stock 25/11/2014 Open AXP Bought Stock 05/12/2014 Open BDX Bought Stock 05/12/2014 Open IBM Bought Stock 05/12/2014 Open Closed Positions (Per One Lot Of Options Sold) Underlying Strategy Result GDXJ – 17/11/2014 Sold 22-DEC26 Naked Put $38 Profit MCD – 20/11/2014 Sold 94-DEC26 Naked Put $48 Profit KO – 20/11/2014 Sold 43-DEC26 Naked Put $21 Profit MCD – 16/12/2014 Sold Jan15-95 Covered Call $25 Profit AXP – 16/12/2014 Sold Jan9-95 Covered Call $44 Profit K – 30/12/2014 Sold Jan16-67.5 Covered Call $67 Profit MCD – 15/12/2014 Dividend $0.85 KO – 15/12/2014 Dividend $0.305 K – 15/12/2014 Dividend $0.49 Scalper1 News
Scalper1 News