Investor's Opinion

Portfolio Update

Published: 2011-11-18 20:35:00 EST by Unknown

It has been way too long since my last post, and there is a lot to cover. So without further ado, I will get right into it.

As a result of all the European debt issues, on November 4th I STC my position of CPLP call options I BTO on October 20th. The result was a loss of ~57%. Since then, CPLP has continued to decline, and I sold my entire position on November 15th. That sale resulted in a loss of ~39%, not taking into account any of the dividends I received in the past or the dividend I received on November 16th. After doing that I continued looking at the chart for CPLP and it is channeling slightly to the upside. I might consider buying a couple Call options slightly out of the money and way out in time and wait to see if there is one of those pops that CPLP has done in the past. But at the same time, I finally learned what it means to compare PEG ratios, and apparently CPLP is over priced. So with this new knowledge, I found a couple of really "cheap" stocks in comparison that also pay dividends, GLNG and TDW.

Back on October 14th, I rolled an AAPL Call option to a higher strike price that profited me enough that I would be playing with the houses money. On November 7th I rolled this option out for another month, but unfortunately AAPL has been on the decline. Right now the AAPL Call option I own is almost worthless. At this point only a little of the profit from the original AAPL Call option position remains. I don't think I will be doing anymore rolling of this option. If it does not start rebounding, I will accept the loss.

On November 16th, I BTO positions in IWM and GLD. The plan with these is to build up positions that reflect the four asset classes. IWM for the broad market of stocks, GLD for gold, and in time, with the execution of my open order that is still pending a lower price, TLT for long term treasury bonds. The forth asset class is cash which remains in my account for the purpose of selling put options against. This is an imitation of the American Asset Management investment portfolio owned by Julian Rubinstein. And if I can hold to my plan, I should be able to produce better than his 9% a year track record.

Finally, on November 18th, I sold my lossing position in DWA. The final result of this was a loss of ~43%. As was mentioned with CPLP, I found out that the PEG for DWA indicated that it was over priced. On top of that the expectation I had that people would spend more time in theaters than traveling was too ambitious in these turbulent times. However, my research did reveal that there are two stocks in the same industry that are doing well, CNK and RGC. These two are the theaters that DWA movies play in. Despite the disappointing attendance in comparison to previous years, they both have nicer earnings than DWA. On top of that, they both pay a dividend. I might take a position in either or both stocks at some time in the future.

That is my opinion, you can take it or leave it. Disclaimer: See bottom of page.

AAPL - Apple Inc.
BTO - buy-to-open/bought-to-open
CNK - Cinemark Holdings Inc
CPLP - Capital Product Partners, LP
DWA - Dreamworks Animation SKG
GLD - SPDR Gold Trust
GLNG - Golar LNG Ltd.
IWM - Ishares Russell 2000
PEG - Price-to-Equity by Growth Rate ratio
RGC - Regal Entertainment Group
"rolled" - (rolling) - to sell-to-close one position and buy-to-open another position in the same group of options to take profit or extend risk.
TDW - Tidewater Inc.
STC - sell-to-close/sold-to-close

Labels: call options, option strategies, PEG ratio, stock picks, stock strategies, trade terminology in use, trading strategy

Updated: 2012-09-07 23:31:06 EDT