Monday, June 6, 2022

A Conservative income investor goes Rogue - a few day trades - a bond - more calls

Underlying Security Symbol:TGT, ADM, C

My strategy during these turbulent market moves is to not do too much.  I am committed to creating income by what ever safe means possible.  I was fortunate in three ways during the past few weeks.

  • I bought a few shares of my favorite stocks on days when they were down big.  Then on up days, I scrolled through these buys and sold anything with a gain.  This created a little cash.
  • About 20% of my calls were exercised with 80% expiring.  The exercised calls created more cash to use during the down days to buy more income investments.
  • Finally,  the calls that expired left me with shares on which I can sell more calls.

Two examples of my day trades:  

I bought some Target on May 24 at $146 and sold them on May 26 at $150.  I hate to fight the tape and it was running against Target.  However, there was no question in my mind that Target was fiercely oversold so I stepped in but I sold just as soon as I could.  

On May 20, I bought AMD at $89 and sold it that very day at $92.  These two trades created income of 2.7% in 2 days on TGT and 3.37% intraday on AMD.   

One example of using the cash from exercised calls to buy more income investments includes this bond that I bought today. The CUSIP is 17330PC64

Like everyone who is a retired income investor, we cannot have enough safe income instruments.  I view the bond profiled today a safe investment.  By a safe investment, I expect to receive the income from the coupon and I expect to get back my money in (3) three years.















Who knows where interest rates will be in three years. My theory is rising interest rates are here to stay for a while.  If that theory is correct, I should be able to roll this bond into a new bond that pays an even higher coupon.  If interest rates go down, I will use the return of my principal to buy equities on which I will sell calls.

Expired calls:

Last month's monthly call expiration was May 20.  Since trading opened on May 23, I sold 25 calls on stocks where calls had expired.  You have to look every day you're actively working your portfolio to find the right opportunity.  I will write a separate post with some of these calls.

Nothing is perfect including my strategy.  Several holdings are underwater. I can't sell calls on them as the premiums on in the money strike prices are very low or even non existent.  A good example is SWKS.  It pays a bit of a dividend and that helps salve my wounds.  Moreover, I've been through this with SWKS before and when it moves up, it will move fast.  I am patiently waiting for that move.

You must be brave and have already done your homework when these opportunities arise.  The little 3 and 4 percent gains add up. Even in this market swoon, I made my "nut" in May by really not doing too much.  Didn't sell in a panic or give up on calls.  It's not rocket science; it's just work.


MM MoneyMadam 

Data from and Marketxls

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