Monday, September 20, 2010

Updating The Alpha-D for Sept. 2010

Today marked the first day of a new month for a short-duration options refresh.  First things first.

My GDX went north of the strike price for the covered calls I wrote.  I bought most of them back and will realize a long-term capital gain on the portion I did not repurchase.  Cash proceeds will stay in cash.  Yes, I'm waiting for the next leg down.  It's just around the corner, sooner or later. 

Now for the options updates.

I renewed covered calls and cash-covered short puts on GDX.

I renewed covered calls on FXI.  No short puts this time, as China is overheating thanks to real estate flipping and insane leverage.  I won't go long any more China / FXI for a while but I'll hang onto what I have and keep writing call options. 

One new options position I opened was to write cash-covered puts under TDW at a strike price of 40.  I still think Tidewater's intrinsic value is a lot higher than that so I wouldn't mind being forced to increase my stake.  The covered calls I wrote on TDW last month will expire in Oct. 2010.

Now let's talk fixed income.  I put a little bit of cash to work by going long Treasuries that mature in October.  I also decided to give the State of California some confidence by going long California state munis maturing in Sept. 2011.  I did this after months of considering the likelihood of repayment for state GO bonds, and I find that to be quite high. I believe the state government will starve every other program - including education - before it considers nonpayment of muni bond interest. 

I keep looking at FLIR but I'm not ready to pull that trigger just yet.

That's it for this month.