I took a conservative approach for September and wrote only deep in-the-money calls on stocks that had the edge I was looking for at entry. Here are the percentage gains for my five trades that are called out today:
TSL – 3.68%
WFR – 3.31%
VMW – 3.10%
CCJ – 2.67%
CMI – 2.2%
Total Average Gain = 2.99%
Since I was not fully invested for September, my actual virtual portfolio gained about 1.2%. I took early positions for October as I found good entry points that worked for my strategy. I am tracking my virtual portfolio compared to the SPY, which moved from 107.53 at August close to 107.88 yesterday, which is a .32% move upward. So even partially invested I beat the S&P 500 by nearly 1 percent.
At some point I will calculate how much I would have made if I had bought the stocks outright and I’m guessing it would have been a very nice number since they all went up and every stock but CCJ was up more than 5 percent. My checkpoints should make for a great stock picking system for straight stock purchases to hold for 3 to 6 weeks. So why don’t I do that instead? My trading style is very cautious. I hate to lose money. I have tried other systems and found myself vulnerable to buying high and selling low, or getting too nervous and shaken out of positions early, when I could have made a profit with patience. This month I would have had a hard time fighting off all the negativity in the market to even enter positions unless I had a hedged entry with a covered call. Since I have a master’s in psychology, my world view is that trading success has as much to do with psychology and emotions as it does fundamental and technical analysis. I have confidence in my system and feel more secure investing when I know I am hedged and can roll into the next month. I feel like I have taken back control from the market manipulators by selling options to give myself flexibility and a cushion against whatever crazy thing happens out there.
