Trading Account Update - Nov 19

As previously stated on this blog, that I have started a trading account with a balance below $1000.00.   I started to add $50.00 every two weeks but that has stopped due to a recent job loss.  The following table shows my stats from the start of 2016:

                                # of trades :                29
                               Total Capital added:    $250.00
                               Trading Acct Balance:  $3130.53
                               Average Drawdown:   $42.71
                               Average Loss:             $51.83
                               Average Accuracy:    89.66%
                               Average Risk:              $52.69
                               Average Reward:         $87.82
                               Average R/R :             1: 1.667

Click to Enlarge

     
       I have been trading penny stocks, stocks, REITS and options.  Any dividends that will be received from this account with stay within the account. The accuracy rate is high. Does this mean that I am a super trader? This does not mean that I am a super trader.  The risk to reward ratio states of every $1.00 of risk there is reward of  $1.67.  Ideally, a trader should aim for a 1:2  risk to reward ratio which causes the accuracy rate to be lower.

Note:  The trades are listed under the Trading Tab above with all the trades listed as of Nov 19, 2016

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Recent Purchase

         I had some money in my TFSA account that I wanting to put to work.  What to do with it? Buy a dividend growth stock,  a bond ETF, average down on a position, or dividend based ETF?

       I noticed an ETF that I previously held in my TFSA had been trading at a low price.  Horizon's Natural Gas Yield ETF (ticker symbol : HNY) was trading below $14.00 per unit.

 

Click to Enlarge

      The objective of this ETF is as follows :

The investment objectives of Horizons HNY are to provide unitholders with: (i) exposure to the price of natural gas futures hedged to the Canadian dollar, less the ETF’s fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy. - Source : Website

        The ETF pays a monthly distribution that is variable.  As per the chart above, you do not necessarily see the variable distribution.  The distribution is paid to 5 decimal places. So, I recently purchased 39 units of HNY at $13.60.  The distribution is approximately between $0.10 to $0.11 per unit per month.  My broker has zero commissions for most ETFs.

       I will update my investing tab spreadsheet in early December with this new purchase.

Disclosure:  Long HNY

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Potash Corporation of Saskatchewan - Covered Call

       I was completely shocked that the  markets were open on November 11.  In Canada, November 11 is Remembrance Day. On the 11 hour of the 11 day of the 11 month in 1917, World War I ended.

       On November 11, I decided to write a covered call in Potash Corporation of Saskatchewan (POT.TO) with a December 16, 2016 expiration day.  This stock trades on both the Toronto Stock Exchange and New York Stock Exchange.  When an investor or trader writes a covered call, they collect premium upfront for being the option seller.  Sometimes, people refer writing a covered call to "renting shares".

       Recently, POT announced a merger with their competitor Agrium Corporation.  On Nov 3, both of these companies voted separately in favor of the merger.  There are still a lot of hurdles to overcome before this merger happens in the future.

Summary:

Commission: $11.95
Option Assignment Fee : $24.95
# of Contracts :   2
Premium  = $60
Days to Expiration: 35

Scenario #1  - Option is not assigned

 Return =  ($60.00 - $11.95) / (2* $25* 100)
            =  0.96 %

This return is for 35 days only.  This is a lot higher than most savings accounts are today.

Annualized Return = $48.05 / $5000 *(365/35)
                             = 10.02%

Currently, my high interest savings account pays 0.80% per year. This is so ridiculous that it is laughable.


Scenerio #2  - Option Assigned

Adjusted Cost Basis currently = $4245.85
Money out = Sell Price + Premium Collected - Option Assignment Fee

Return : (Money out - Money in ) / Money in
           = ($5000 + $48.05 - $24.95 - $4245.85 ) / $4245.85
           = 18.31 %

EDIT:  For Scenario #2, the return would actually be higher if I included the dividends previously received.

 Disclosure:  Long POT

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.