New Goal - To buy a dishwasher

To be honest, selling calls against CZZ the last several months has been boring.  However once I ended up selling my stock this month, and tallied up my earnings, I was shocked at how much I was able to make since I started on this adventure.  I haven't been keeping good track of my investments, because every month was pretty much the same. Expiration Friday would arrive each month, and I would turn around and see how I could sell seven more Calls of CZZ for the most money.  Then I would wait for Expiration Friday again.  Like I said before, it was “BORING”.  But in looking back on things, earning approximately $100 once a month really does add up.

This leads me to my next topic…. I need a goal to keep me motivated; something to push me.

With my past experiences in mind, I have decided to set a relatively short term goal of acquiring a tool that would improve the quality of life for my family.  My objective?  To obtain a dishwasher.  We currently wash our dishes by hand, and have done so for over the last 10+ years. This would be a luxury item for us.

So, now to the goal.  A good goal has a specific time line, with a specific objective in mind.  It has to be measurable. And it has to be realistic. 

I believe we can get a decent unit for under $400.  To make sure that I continue to grow my cash I would like to earn $800, before I make the purchase.  Based on my past experience with trading options I feel confident that I can achieve this in seven months.  


Now that my goal is set, I need to find an Option that will provide me with the return I am looking for.  I'll keep you posted.

Table 1: Goal

Goal	End Date	Amount Needed	Amount Earned to date
Buy Dishwasher	09/30/2012	$800	$0.00

Update

Hello,

Even though I have not posted for awhile, I have continued to invest.  Here is what has happened.

In April I sold 7 Puts of CZZ at a $12.50 strike price.  These options were exercised, and I found myself owning 700 shares of CZZ.  The cost of the shares exceeded my funds, so I ended up having to buy some of them on margin.

Since that time I have been selling $12.50 calls using these shares.  This month I sold 7 calls, expiring in July (2 month contracts), and received $194.90. 

In addition to the money that I have been investing for this blog, I decided to sell some stock in another fund that I had been holding for a few years.  I took the money from this and sold a Put on the Inverse Exchange Traded Fund (ETF) Proshares Short Financials ticker: SEF, following advice from the Weiss Research Safe Money Report newsletter that I received from Mike Larson.  My intention with selling this Put was to purchase the stock at a lower price than what the market was currently going for, after the profits were figured in.  Here is what I did: sold to open 1 SEFMay11 $37 Put, for a profit of $245.03.  When the option was exercised, I ended up spending a total of $3,464.92 after subtracting the $245.03 from the $3,709.95 that I spent on purchasing the 100 shares.  The current price of the stock is $37.69.  The idea behind SEF is that its price goes up when the Dow Jones U.S. FinancialsSM Index goes down.  I expect the price will continue to go up as banks continue to have issues.  I have been contemplating selling calls against the stock that I own.  However, I am hesitant because I do not want to have to sell my shares if the call gets exercised.  I think this ETF has the potential to reach the highs that it saw in 2008 and 2009 around $124.66/share.

The last few months have been a little bit difficult for me to determine which direction the stock prices are going to move.   Stocks I have been watching, MCP and GPL, I thought were going to surge up; but they have been doing the opposite.  I expected that they would pull back a little bit, but not to this degree.  If it is difficult for you to stomach big swings in the market, you might want to sell some of your stocks to limit potential losses. I still think both of these stocks will recover in the not too distant future, but their swings are nerve-racking. Also, stay far far away from long term Treasury Bonds.

Investment in Education

I wanted to let you all know that a few days ago I spent $49 to get the "Safe Money Report" from Weiss Research.  The purchase also included: Money and Markets, MAM Weekly Addition, The Safe Money Gold Strategy, Weiss Portfolio Defender, The Great American Apocalypse of 2011-2012, SMR Welcome Package, Safe Money Video Library, and Weiss List: Strongest Banks and Thrifts in the U.S..

I must admit that I can get sucked into infomercials.  PBS pledge week has drawn me in several times; not that I regretted any of the things that I purchased from them.  Also, Carlton Sheets made great points for his "No Money Down" system at 12 a.m. in the early morning.  Although, over 10 years later, I have yet to buy a rental property.  I can not say that I didn't learn anything from the "No Money Down" plan, just that I didn't use the information to the best of its ability.

But I digress.....

The Weiss Research company asks that people who republish their work give attribution to the author(s) and include the following information:

"This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com."

If I think something is important for you to know, I will try to fill you in.

For example, Mike Larson sent a file titled "What to Buy (or Sell) First".  In it he recommended buying 200 shares of the ProShares Short Financials (SEF) at the market, buying 100 shares of the Short S&P 500 ProShares (SH) at the market, and avoiding long-term bonds; particularly Treasuries.  The first two recommendations are inverse ETFs.  They go up when the corresponding index declines.  He based this recommendation on a $100,000 portfolio, and said to adjust the number of shares you buy to best fit your situation. 


A year or so ago, I read in one of Money and Markets free articles that people should avoid long-term Treasuries.  This was probably around the time of the crash.  So, I moved my IRA funds into PRTXX-U.S. Treasury Money Fund; which invests in short-term Treasuries.  I have not made a lot with the money in it, but I also have not lost it either.  This is my safety money, and I don't want to lose it.


As always, do your own research.

Option pick for April

I decided to sell $12.50 puts for the month of April on CZZ.  The stock price is really close to the strike price, allowing me to make more money. 

I am thinking that the stock price will touch down on $12.50 in the next few days, where the red line crosses the lower blue line on the chart below.   The stock price will then bounce up staying within the blue channel.

There has been a lot of talk in the news about the price of food going up. Which I think will only drive the stock price up.

Chart 1: Cosan LTD (ticker symbol: CZZ)