To all, Portfolio notes. 1. I bought another third of R&B Falcon (FLC) yesterday. They reported a loss, but I like their position in oil services longer term.
2. I unwound the Lucent spread conversion I put on less than a month ago. Anyone who is following that trade can use these numbers to figure the return: I punted the stock at 86 5/8, bought back the call for 38 3/4, and sold the put for 3 1/2. This was a small position but is very illustrative of the upside these spread conversions can offer for little or no risk in an income portfolio. Basically, this one paid more than 6%, after commissions, in less than a month. That isn't annualized. True, I may not find another one that good for a year, but, if my cash earns at an annual rate of 5% while I'm waiting, I still have a double digit return in my income IRA. The key is the low risk. If I make a good return, great. But if the stock goes against me, my risk is still a positive or breakeven return, which makes for some nice totals net, net.
3. I also unwound a Sang Stat buy/write. I was going to turn it into a spread conversion, but it ran up before I could get the long put leg on. That is a really good thing. <G> I made 14% in exactly a month on this one. Don't annualize it. It will hurt your head and that type of return is rare. The Lucent experience is even fairly rare. Aiming for 10-20% income annually is realistic, not compounded 182%. <G> Some clunkers will creep in. BTW, I still own Sang in the Cap App portfolio.
Good Luck,
MB |
