Tuesday, February 22, 2011

Updating The Alpha-D For Feb. 2011

Options expiration last week left me with choices to make.  I allowed a small portion of my TDW holdings to be sold away and renewed my short covered calls on the remainder.  That stock has been on a tear recently so pocketing some gains is okay by me.

Similarly, I allowed some of my GDX to be called away and I renewed my covered calls on what was left.  The shares called away were sold at the exact price I was forced to pay a month ago when they were put to me.  That doesn't happen often, so I'm grateful to be lucky enough to have collected the cash from those covered call options. 

My covered calls on FXI expired unexercised.  I renewed them this month with no change in the size of my underlying equity position. 

I also still have my long ATHR position with covered calls and cash-covered short puts.  This special situation play still looks like it will pay off. 

I am not shorting any other puts this month against anything.  Markets worldwide are far too overvalued right now given the debt loads most companies and countries are carrying.  I'd rather not have any overvalued equities put to me at this time. 

I don't ignore fixed income, as I did when I was younger.  I added to my holdings of short-dated California state muni bonds.  I even grabbed some short-dated Treasuries.  It's hard to turn down a little extra yield.  The stagflationary U.S. economy could break either way towards depression/deflation (ruinous for equities) or higher inflation (bad for bonds).  No one knows in advance which will prevail, or even if stagflation will persist (my current opinion).  I'm just staying flexible, with cash on the sidelines ready to buy anything that breaks the right way. 

Full disclosure:  All positions described reflect my true portfolio.