Catch-up post on options expiry events in my other two portfolios. It was a perfect time to be using the market to decide exits on a few covered calls and to raise cash.
Portfolio News
In a week where S&P 500 dropped 1.41% for a second week of losses, my alternate portfolio dropped 1.29% helped with the bounce in gold and solar power and AirBNB (ABNB)
Lets talk a little more about inflation. Somehow the Federal Reserve has been blindsided by the stubborn nature of the transitory inflation which came out of the pandemic. I found [this article](this article) in Wall Street Journal in which monetarist economist John Cochrane digs behind the lines a bit. Now at Stanford University, John Cochrane was a long time colleague of esteemed monetarist economist, Milton Friedman in Chicago.
This is not about pent up demand. This is not about supply chain bottlenecks. It is about 5 trillion dollars of fiscal stimulus added to a 15 trillion dollar deficit without any clear plans for raising taxes to repay it. Add in a Federal Reserve who only understand monetary tools he is not surprised. Is there a way out? Ask Zimbabwe and Venezuela and Argentina (my words) and watch inflation wipe out the value of money to make it possible to repay $20 trillion with maybe $10 trillion of value.
Bought
Loop Industries, Inc (LOOP): Speciality Chemicals. Assigned on a naked put at 11.6% premium to $6.72 closing price. This brings down average cost. Loop Industries are developing "technology that transforms PET (polyethylene terephthalate) plastic and polyester fiber waste into high-purity, virgin-quality PET resin that can be used again and again". They are in the early stages with an innovation centre in Quebec, site work started on a manufacturing facility in Quebec and agreement on a manufacturing site in France.
The chart is not pretty with price breaking the uptrend and not showing signs of reversal. There is a buyer zone around the $6 mark which has held through several tests since mid 2018.
This is a long term investing idea. My holding is small with average cost at $11.44 vs Friday closing price of $6.72. Income trades have contributed 10% of that closing price. My instinct is to double my position size when price shows a bounce off that buyer zone.
Sold
Airbnb, Inc (ABNB): Travel Services. Assigned on covered call for 10% profit since January 2022. I had written covered calls at two different strikes and retain the other half of the holding.
A quick look at the chart shows how price is following a similar trajectory to the one we saw in early 2021. Last month I placed a protective put trade on which I closed profitably (sold the bought put and the sold ratio put expired in my favour). The challenge is to work out what to do next. Average cost for my stock is $159.05 - protect the capital vs a credit bull put spread. I will write a covered call as strike will be well above my cost base.
Yamana Gold Inc (AUY): Gold Mining. Assigned on covered call for 11% profit since January 2022. I only added this holding last month as this portfolio was light on gold and silver hedging. I will replace this in some form.
Bristol-Myers Squibb Company (BMY): US Pharmaceuticals. Assigned on covered call for 4% profit since December 2021
Helmerich & Payne, Inc (HP): Oil Services. Assigned on covered call for 16.3% blended profit since October/December 2021. Averaging down helped. I had added in this stock as it was lagging other oil services stocks. I will go back to look at laggards to decide what to replace this with.
Sociedad Quimica y Minera de Chile S.A. (SQM): Lithium. Assigned on covered call for 16.6% profit since December 2021. SQM has lagged within the Global X Lithium and Battery ETF (LIT). I will review what to replace it with. Lithium and battery technology are here to stay.
United States Steel Corporation (X): US Steel. Assigned on covered call for 8.9% blended loss since August/September/October 2021. These were all averaging down trades with only the last one making a profit. I remain exposed to steel through a holding in VanEck Vectors Steel ETF (SLX)
Income Trades
42 covered calls written across these two portfolios (Canada 1 Europe 8 US 33) of which 6 were assigned (all US). 8 naked puts written with one assigned (all US)
Cautions: This is not financial advice. You need to consider your own financial position and take your own advice before you follow any of my ideas
Images: I own the rights to use and edit the Buy Sell image. News headlines come from Google Search. All other images are created using my various trading and charting platforms. They are all my own work
Tickers: I monitor my portfolios using Yahoo Finance. The ticker symbols used are Yahoo Finance tickers. Crypto tickers come from TradingView
Charts: http://mymark.mx/TradingView - this is a free charting package. I have a Pro subscription to get access to real time forex prices
Trading: Binance offers a wide range of coins to trade, tight spreads and low fees if you use BNB to pay https://mymark.mx/Binance
Kucoin offers a wider range of altcoins than many of the other exchanges. I do like to diversify my holdings in case an exchange gets knocked over. Grab 15% discount on your trades whn you open an account on this link https://mclnks.com/kucoin15
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February 18, 2022
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