DGI Adventure 06-06-2017 Month in Review – May 2017

Well that was fast!

It seems like just yesterday I was summarizing April, and now May’s over?

For the second month in a row, I didn’t write any posts. I made a handful of trades. No new positions really, but I haven’t documented them. So I guess it was kind of a slow month, but still, I’m not being as diligent as I had been about documenting every trade. Mainly because it’s a little tedious?

I’m thinking about shaking up the structure around here. Stay tuned. Don’t worry though: monthly updates aren’t going anywhere, and any new positions will definitely get an investment thesis. Promise!

Anyway here’s what happened in May.

Portfolio Summary

 

 

Stock Purchases

2 stocks purchased. Both are additions to existing positions; projected annual income increased by $155.36 based on current dividends.

05/03/17 – GE: 41 shares purchased @ $28.88/share plus $6.95 trade commission for a total investment of $1,191.03. This was a limit order my wife put in a while ago. Usually this is where I will marvel at her ability to use limit orders to pick off the most perfect moment to buy a stock. Not so much this time around. GE has been getting hammered over the last month. Oh well.

Annual projected income is increased by $39.36/year based on the projected annual dividend of $0.96/share.

5/05/17 – CSCO: 100 shares purchased @ $32.50/share. This was the result of an option assignment. You may remember from last month, that I got assigned CSCO at $34 on a put that I sold in March but never wrote about. Well I followed that with a covered strangle, in April, which I also didn’t write about. For the uninitiated, that means I sold a call against my shares at a strike above my cost basis, but I also sold another put (with the same expiration date as the call) below my cost basis. If the price goes up, you sell your shares, if it goes down, you buy more but average down your position. If it’s flat you keep the premium. You can’t get assigned on both! Well the price went down, so now I own 200 shares of CSCO. The share price is still well below my cost basis. I’m not sure I’m ready to buy more yet though. We’ll see I guess.

Annual projected income is increased by $116.00/year based on the projected annual dividend of $1.16/share.

I closed out of my open UVXY put positions.

I sold 2 contracts of the UVXY 18JAN19 15.00 P for $9.79555/share, which represents a 4.12% net profit over my cost of $9.40793/share. I bought the puts on 3/24/17, which means the trade was in play for 45 days, so my annualized return works out to 33.42%.

Not too shabby. I’m averaging a 78% annualized return on this trade. It feels like it’s getting crowded though, which means it’s harder to find attractive entry/exit points. The market makers seem to be getting a lot better at pricing the price decay into the premium. I’m not ready to give up on it yet, although I didn’t replace the closed positions.

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker.

For the uninitiated, I am shorting UVXY because it is the worst ETF ever. I use long put positions so I can avoid the use of margin and do these trades in tax-advantaged accounts.

Additional exploits can be found here, here and here.

Pay Days and Raises

Dividend Income Tracker is published back at the mothership and has been updated.

Total investment income of $1,316.75 with a taxable total of $31.38. We’ll call it 13 “pay days” with 29 individual payments received.

Options premiums represent $180.85 of that total.

Capital gains made up $777.52.

Which leaves $358.38 of actual bona fide dividends (and $31.38 of P2P lending interest).

That’s probably my lowest options total in a long time. I told you it was a quiet month!

Lending club income is aggregated into a single income record for simplicity’s sake. It actually arrives as a lot of small payments over the course of the month. No loans were charged off this month, but the backlog of troublemakers is growing. There are currently 5 loans that are “late”. 2 of them are “kinda late” and 3 of them are “very late”. The loans in the 31-120 days category should still stay alive for at least another month. If things don’t turn around though, July might be ugly for the Lending club account.

 

This should be fun to track. This table will grow with each monthly update.

Lending club’s algorithm has suggested I write down $67.97 worth of principal for the loans that are late or in the grace period, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off to recognize the loss.

That is nearly double what it suggested last month ($36.91), which kinda speaks to that impending doom I predicted above.

Comparisons

Month over month, investment income was up 103.4% from $647.42. The bulk of that difference comes from the capital gains realized when my WMT covered call was assigned. Things were pretty stable actually.

Year over year is kind of a weird one. May of 2016 is when I took my leap of faith and moved my inherited IRA over to Interactive brokers. To do that, I liquidated a bunch of mutual funds that weren’t available on the IB platform, which resulted in an $8,100 capital gain. Total income from May of last year was $7,471.48. So YoY is kind of a silly comparison.

Going forward though, YoY should be pretty comparable since June 2016 is when I started fully executing my current options strategy in the inherited IRA.

Raises

One of the dividend distributions received represented a raise:

AAPL paid $0.63/share compared to $0.57/share in the previous quarter. That represents a 10.52% increase. The share price has appreciated quite a bit since my wife made this investment in January of 2016, so even though this is a very healthy dividend increase, the market yield is down to 1.6%. Her invested yield is over a point higher at 2.65%, which is nice.

I closed this article last month asking if it was time to “sell in May and go away”.

I did sell my WMT shares as a result of a covered call option assignment, but I’m holding onto everything else, and we bought into a couple more positions, so there you go.

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