Well, a little late, but better than never.
January definetly proved to be an interesting month, with the market dipping 5-7%, a lot of the options premiums became less appealing as my buy in prices and the actual stock prices seemed to be continually be moving apart, ha. At any rate, just pushed some options out a little longer than I typically do to collect at least some premiums, and put those earnings back into my accounts, is essence doubling down a little and lowering some cost basis on stocks I like (VZ and F).
So Jan didn't end up to be the hot start I was hoping for, but Feb is looking to be better (half a month in now since I'm late on this post), the market is going back up and both VZ and F pay dividends to start and end the month.
My totals for Jan were below, for a total of $1625.53 in short gains (options + cap gains from option stocks) not a bad start considering the market, but have some ground to make up for sure if I want to make my goal for the year.
I added two pics at the end that I thought interesting. Even though the market turned down in Jan, with the dividends and option premiums I received, I was able to "soften" the blow vs the normal market, just another added benefit of using this strategy.
Monday, January 6, 2014
After what I consider a pretty successful first full year of options trading, a new year brings a time to look back, tweak things, and set goals and procedures for the next year.
My goal for 2014 is pretty simple, I would like to generate 45K in options/short term capital gains this year. This will take some smart trading, along with adding additional capital to my account by saving more, but I think it can be done. I would be very suprised if I'm at 20K by June, but think I can play catch up the second half of the year as that's when the seasonality of my job allows me to stash more cash away. So there you have it, one singular "goal". 45K or bust.
That being said, I am going to change up my rules of engagement a little bit. This year I really didn't follow any protocol with my "earnings" from the options. Some I would simply leave in the account, at other times I would pull out and use as disposable income, there really was no rhyme or reason to what I did with the earnings. So here is a system I have devised to follow this year.
1. I will split the money I earn on options that expire worthless 50/50. 50% will stay in the account, and 50% will be pulled into my banking account. Dividends collected on stocks I own with options on them will for the most part be auto-dripped into additional shares. The few stocks I own that I don't auto-drip will be split in the 50/50 ratio as well.
2. From there I will use the 50% of the money transfered to my bank to pay off whatever debt I would like to target. I currently have a balance on a credit card I would like to clear up (gets close then I seem to put another purchase on it), a new car payment, and the ever present college loans. Applying this extra income to those balances should accelerate the payment pay off schedule, and hopefully get the credit card and the car (almost) paid off by the end of the year.
3. The other 50% I will tally at the end of the month, and initiate a monthly purchase into a dividend growth stock I may own already or start a new position in a stock I want to own (in the TradeKing account I am trying to actively grow), thus generating more income with a potential for capital growth.
By following these steps, I will be paying down debt as well as investing for the future at the same time, and I think this could be a very efficient strategy. It will add a little more book keeping on my end at the end of each month, but I think as I see the balances go down on the few debts I do have, it will keep the motivation up.
So there you have it, my game plan, and now that it is written down, it's just a matter of following the steps every week the options (hopefully) expire worthless. Let the games begin!!