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Another month another Covered Call Trade Option Expiry!
It is looking almost certain two of my positions will definitely end in the June option expiry showing a loss. The positions are Rent-A-Center, Inc (RCII) and Chunghwa Telecom Co. Ltd. (CHT).

I just have no idea why the option of CHT is behaving like it is. For example I have a long June $20 call. With the CHT trading at $19.69 and over two months to expiry, you expect to get some money for it, wouldn’t you? No, $0.03 was on offer! You need to pay $0.50 buy the long put though. What can I do, give up!

RCII, since its recovery, is not looking back, trading over $24 at a time, retreating with the market at the moment though. My insurance June $20 put option is now worth hardly anything, squeeze a measly $0.25 per share, if I am lucky. I will hang in there and let it expiry in June. I am not giving “sorts law” the satisfaction to dump RCII back down to $18 just after I sold! There! A grain of comfort is the loss should be limited due to my covered call format.

AUY, Yamana Gold Inc. is still showing over $3 loss per share. With over $2 already pocketed as profit, I still have high hope for it. As long it can hang on above $10, there will be hope for an eventual successful outcome. Unfortunately it fell below $10 along with the retreating market today.

iShares MSCI Canada Index fund, my EWC ETF position was showing sign of running away from me. It was trading around $28.75 and I was sure it would be called away in May expiry. For this month, I managed to roll the April $27 call to the May $27 call for $0.15 per share.
I was expecting to close the position during April expiry for an overall annualised profit of 2.5%. The extra $0.15 income will help to improved it to 2.8%. You never know, if EWC hang around at the current price range, I might be lucky and improved the figure every month. The important factor is the risk profile will improve each month too.

I tried to repeat the same trick with iShares MSCI Hong Kong Index Fund, the EWC ETF position. EWH share price was very sluggish compared to that of EWC, I was not able to get $0.15 for the roll over. I notice a new worrying trend that there are no demands for either EWH put or call options. That is going to jeopardise the profitability of the position. After EWH retreated a bit, I eventually managed to roll to the May $16 call for $0.15. Since then the Market seemed to be gathering momentum for a full blown retreat. If only I knew I would have my EWH be called away to be bought back again next month at a lower price! Never mind, just a reminder why covered call is better deal. My conventional portfolio is causing much more concern seeing red everywhere.

So overall, the last few months were not a shining success in my investment profile. The retreating market today is causing further concern. What will tomorrow bring?

In my previous post, I planned to close my iShares MSCI Canada Index fund (EWC) position for a small annualised profit of about 1.6%. Since mid-March, there is sign of life for EWC and I decided to extend this trade for another month by rolling the March $27 call out to the April $27.
If exercised at next expiry, the annualised gain would be improved from 1.6% to about 2.5%. Mind you since my March $27 put has lapsed, there is no longer insurance in place. With EWC share close to $28, it is worth risking owning the shares for another 30 days.

It is similar story for my EWH position. EWH price returned to above $16 after several months lingering below it, causing me a bit of problem. If it stays above $16, the position should close in June with similar profit level as that of EWC.

I am admitting defeat for my other three positions:
Yamana Gold Inc. (AUY)
Rent-A-Center, Inc (RCII)
Chunghwa Telecom Co. Ltd. (CHT)

I am hanging on my AUY shares though. Currently it is showing over $3 loss per share, not counting over $2 gains already secured. I firmly believe gold price will eventually reflate thus reviving AUY. Assuming there is nothing wrong in AUY as a company!

The CHT and RCII positions are hopeless. I am planning to close RCII position for a loss of about $0.30 – $0.40 per share.

I will just let CHT position drift till the June expiry.

There will be adjustments and fine tuning of my covered call trades, probably concentrating more on ETF’s and less on individual companies. I will want to avoid erratic shares such as RCII which dropped $2 in one month then regained the $2 and popped $3 more in another. It was like playing hide and seek with its share price.

My Virtual Trading on Forex is still progressing. One of the Robot under test is doing quite well, another is also showing gain but has not enough trades to prove one way or other. I will discuss more about Forex trading after I plug up enough courage to trade in earnest with real money.

Another Option Expiry came and gone. Covered Calls Trading is bullish strategy. Guess what I was experiencing? You got it! Most of my positions were facing downward pressure, not pretty.

I said most of my positions because one position, Rent a Center, INC (RCII) to be exact was doing too well! Too well, what do you mean?
Those of you read about my RCII problem from my previous posts might recall after I sold 5 contracts of RCII $20 Puts, the share price suddenly dropped $2 to about $18 and threatened to keep on dropping to oblivion. My long put insurance saved the day though, and my loss would always be limited and several times I was tempted to exit the position entirely for a small loss.
Reluctant to face certain loss kept me in the position which could finish up in June when the insurance will expire, forcing closure of the position at a bigger loss. Decision! Decision!
My decision was to hang on. Right now, the positions look like this:
Short 5 RCII March $20 puts
Long 5 RCII June $20 puts

The twist was RCII shares slowly recovered and then hovered around $20 mark which was exactly how I liked it. I must have upset someone overhead when I celebrated too loudly! One day RCII suddenly jumped $2 to around $22. As an investor I have to protest vehemently! Why, because now I am gradually losing premium of my $20 put insurance prematurely. Why is my porridge’s temperature never just right? Lament a disgruntled investor!
Actually, if my closed my June puts and wait for my March put to expire worthless, I should achieved a small profits. But, as soon as I closed the long puts, I bet RCII will drop below $20 again, where will I be then?

No, I am hanging on, till March expiry at least. Let’s see what will happen!

Chunghwa Telecom Co. Ltd. (CHT) decided to do some re-organisations. I was not able to find out a lot about it. What happened did cause havoc to my CHT option trades. There has been no demand for both short call and put options at all. The final result of this trade is not going to be pretty, certain loss to be sure, but it should be limited though. A bit of tweaking of the strategy is called for.

As for the other positions of Yamana Gold Inc (AUY), iShares MSCI Canada Index fund (EWC) and the iShares MSCI Hong Kong Index Fund (EWH), several months of downward pressure rather killed off demand for call options for all of them.

After expiry, I just managed to sell the EWC March $17 call for $0.35. This should mean the bottom line of the EWC trade is going to be a tiny overall profit when the position closed at the March expiry. Right now I am long 5 March put and short 5 March call. My EWC shares will either be called away or I will exercise my long put contract, either way, the shares will be sold for $17. I calculated there will be a tiny profit of $85 for an outlay of $13500 for five months. This will be annualised to 1.6% hardly something to shout about. The main reason was EWC shares price hardly rise above $26 for the last few months so no demand for the $27 call, but loss of the position was always minimized.

Prospect of EWH is less sound and very unlikely to end in profit in June unless unexpected recovery to near the $16 level soon. Right now I could not even sell the April $16 call for anything worthwhile, the March $16 is on offer for $0.05. I will forgo the vacancy of this month unless there is change in the next few days.

AUY is looking to be very sick. It became a long term hold situation. I will sell the AUY $14 call whenever I can obtain a decent premium. There is a cushion of $2.15 per share profit from previous closed Covered Calls receipt. Hopefully it would be enough to help keep the nerve sturdy. Other than that, I have to rely on the yonder hills to have tons of Gold, Amen. I am also praying for AUY shares to stay above $11 at least until gold price revives! Oh dear! Owning shares without insurance is just not good for the nerves!

In my Forex Expert Advisers (EAs) evaluation front, one EA did not trade during last few days, but the other showed its virtual gain increased to $10000 to $12500! It is very early days!