Two weeks ago I watched the NFL divisional playoff game between the Dallas Cowboys and Green Bay Packers. The Packers burst out to a large lead which was whittled down by the Cowboys to nothing when they kicked a field goal to tie the game with a minute left. The Packers then drove down the field to kick a game winning field goal which delighted Packer fans (which I am not) and Cowboy haters (of which I am one as a New York Giants fan).
If the game had ended tied the teams would have gone to overtime under the arcane NFL overtime rules that proscribe that each team must possess the ball once unless the team that possesses the ball first gets a touchdown in which case the game is over. College football games allow each team to possess the ball at the opponents’ 25 yard line and if the score is still tied, the teams each get to possess the ball again and again until a winner is decided.
Every sport has different ways to break ties. I like the tiebreaks that are as close as possible to the actual game. Basketball games break ties with continual 5 minute periods and baseball games that replay the 9th inning are my favorites. I like the 30 minute mini game complete with a mini half time that follows a tie soccer match but don’t understand the need to have the shootout after the completion of a tie mini game. Sometimes I feel a tiebreak is unnecessary. When two or more players are tied at the end of a golf tournament I don’t understand why the winners can’t be called co-champions, given replicas of the championship trophy, and split the prize money.
The world of chess had three of their championships decided by tiebreaks in the last two months. In November the ‘Classical’ Chess Championship between champion Magnus Carlsen and challenger Sergey Karjakin was tied with 1 win apiece and 10 draws after the scheduled 12 classical games that gave each player 100 minutes for the first 40 moves, 50 minutes for the next 20 moves and 15 minutes after move 60 with an extra 30 seconds per move. The reason for the term ‘classical’ is twofold – the lineage of this world championship can be traced back to 1886 and has always been decided by matches between a champion and challenger in matches of games at these very long time controls. A tournament was held to determine the champion after the death of then champion Alexander Alekhine in 1946 which was the only exception to matches. FIDE (the world chess governing body) has had championship tournaments to crown FIDE champions but there is no direct line of succession and these champions are known as ‘FIDE’ champions and not the chess champion of the world.
Carlsen and Karjakin settled their ‘Classical’ championship in a very unclassical way – they played a four game match at the time limit of 15 minutes + 10 seconds a move. Carlsen won the mini-match and kept his ‘Classical’ world championship crown. The aftermath led to a number of suggestions to avoid the classical championship being decided by a rapid chess match. Some advocated going back to the old rule that allowed the champion to keep the title in case of a tie match, which supposedly would make for more fighting chess since the challenger would know they had to win the match to gain the title. Another popular suggestion was to play the tiebreak match before the match with the similar idea of promoting fighting chess since the loser of the tiebreak match would have to win the classical match to be crowned world champion. My idea in the case of a tie match would be to declare the contestants co-champions and allow both players the right to play in the next Candidates tournament and instead of declaring the winner of the Candidates tournament the official challenger have the first two players compete in a match to be the next champion. I think the lack of drama caused by a tie match would be offset by having two champions both competing in a Candidates tournament.
In December FIDE held their annual World Blitz (3 minutes + 2 seconds per move) and World Rapid (15 minutes + 10 seconds per move) championships. These are my favorite chess events of the year. The action is fast paced with 5 rounds of 15 minute action each day with 12 and 9 three minute rounds to view with the top players in the world battling each other in every round. The top players were Carlsen and Karjakin, top 10 players Maxime Vachier-Lagrave Hikaru Nakamura, Levon Aronian, former World champion Viswanathan Anand, and defending blitz champion Alexander Grischuk. Carlsen had a rough start with only a draw in his first two games before winning 4 games in a row. Carlsen then lost to former top player Vassily Ivanchuck, win two in row (including a win over Grischuk) before drawing Aronian and losing to Anton Korobov. With 4 rounds to go Carsen tied for 12th place, a 1 point and a half behind Ian Nepomiachtchi. With his back to the wall, Carlsen won his last four games including a win over Nepomiachtchi to claim tie for first place with Ivanchuk and Grischuk, who all scored 11 points out of the 15 games.
Well, actually only Ivanchuk could claim first place because instead of having games to break the tie the regulations of the tournament proclaimed the first tiebreak to be the average rating of each players opponents which was Ivanchuk, with Grischuk taking second and Carlsen third. This put Carlsen at a competitive disadvantage since he was the highest rated player and didn’t get to play himself. Carlsen was also penalized for his poor start because it meant he had to play lower rated players in the middle rounds as he worked his way back to the top. There was a small amount of drama in the final round since Carlsen won first and still could have finished first if Ivanchuk had not won his game AND Grischuk’s game with Nepomiachtchi ended in a draw but all in all a lackluster finish compared to a playoff.
Matters didn’t improve for Carlsen in the 21 round blitz championship that followed the Rapid tournament. He lost his game with Karjakin but quickly caught up and the two world championship contestants were far ahead of the field heading into the final round with Carlsen leading by a half point. Karjakin had clinched the tiebreak by playing slightly stronger competition than Carlsen who was again at a disadvantage by not getting to play the highest rated player which was himself. In the final round Carlsen could only draw with the black pieces while Karjakin won his game to tie Carlsen with 16.5 points out of 21 games and be declared champion on tiebreaks. The result seemed more legitimate than the rapid tournament since Karjakin did defeat Carlsen in the tournament but without some sort of playoff I fail to see why the winners of the blitz and rapid tournments couldn’t have been named co-champions. Unlike the ‘Classical’ championship where being world champion carries certain privileges like skipping the candidates rounds, the rapid and blitz world championships carry no privileges except for a trophy or a different medal.
I can see having a computed tiebreak for NFL playoff spots where playing a tie break game would play havoc with the playoff schedule but I cannot see having one for a world championship chess tournament. FIDE should either have the players fight it out over the board or declare all the leaders as champions instead of using an artificial computation. I don't feel too bad for Carlsen though. He tied for first in the Classical, Blitz, and Rapid Championships but has only one title to show for it but at least it was the most valuable of the three.
Friday, January 27, 2017
Friday, January 20, 2017
In Comfort
Three weeks ago I wrote how I went to see the ‘Rogue One: A Star Wars Movie’ with my neighbor Don on the day after Christmas. Don has lived in the house next to our garage as long as we lived there. Don worked 4 blocks away at the hospital cleaning up and bringing hospital stuff to the incinerator. He would come over the house for Thanksgiving, Easter, and Christmas dinners when he wasn’t visiting his other relatives. When Don retired he drove his car (a 2001 Cavalier) in town until he had an accident and lost his license. After that Kathy took Don to the grocery store with her on Mondays and I would occasionally give him a ride if he needed to get drugs at the drug store or run some other errand.
Last week Kathy couldn’t take Don to the grocery store on Monday because the kids were heading back to school from their winter breaks and she was going to spend all day driving 110 mile round trips to the airport. She called Don’s cell phone and left a message that she would be going grocery shopping on Tuesday. This was not an unusual occurrence and Don would call if he was out of eggs (Don would eat 4 eggs for breakfast every day) and we would pick up what he was out of.
On Tuesday Kathy went to the garage to go grocery shopping and Don wasn’t waiting by his back door. Kathy went to Don’s back door and knocked but there was no answer. She opened the door and called Don and found him face down on his bathroom floor. Don has passed away sometime over the weekend. Kathy called the police and Don’s nephew to let them know. We looked for the next couple of days for the obituary to be in the paper and finally there it was and the first sentence was:
Well, there you have it! Someone found dead on their bathroom floor actually ‘passed away…in the comfort of their own home’. I was never in Don’s house but I have to think he had more comfortable furniture than his bathroom floor. I read the rest of the obituary (and you can too by clicking here) but had a hard time getting past the fact that if the very first sentence was hardly the truth how much of the rest of the obituary could be believed. So since I have had way too much experience in writing obituaries this past year I thought I’d write what I knew about Don and at least it would be the truth.
Don never married or had kids and lived in a rundown house next to mine for the last 30 or so years. As I mentioned Don worked in the sanitation department of the local hospital for many years. He liked working there and would tell me that how well he was treated by the big shots at the hospital and when he got sick the doctors would give him sample medications to save him the expense of buying it himself. I have been sorely tempted to make the hospital a source of ridicule in the Broken Pawn. They spent a fortune to rebrand themselves from the Marshalltown Medical & Surgical Center (a name that makes it readily apparent where you are and what you do) to the ambiguous Central Iowa Healthcare. Then they spent $35 million on 'Phase 1' of a new facility on the south side of town two years ago. All this spending led to bad press when the emergency room doctors quit because they weren’t being paid. Eventually the CEO had to resign and the hospital recently filed for bankruptcy. And this is a non-profit hospital! But I never trained my sights on this hospital because of Don’s stories about how well he was treated.
Don’s main passion was pop culture. He loved movies, country music, and coins. He was the first person on the block to have a satellite dish and he subscribed to 5 HBO channels so he would be sure not to miss any of their featured films. He recorded movies on tapes and later DVD’s and would order collections of his favorite television shows. His favorite show was ‘Smallville’ but he enjoyed all the superhero shows like ‘Agents of Shield’ and when a new superhero movie came out would go to see it with us or by himself. Don was an avid coin collector and would get the mint set of each year’s coins. He had a few silver and gold coins but didn’t talk too much about them. Every couple of Christmases he would get our kids a set of mint coins for the current year. Collectibles never seem to be worth what the owner thinks they are so I don't know how much Don's coin collection was worth except it was worth a lot to him. A lot of single guys who never get married end up with a lot more money than anyone would ever expect. I doubt Don was one of those guys although it wouldn’t surprise me either. One thing I’m sure of is that I’ll never know.
Don never owned a computer or used the Internet. I don't know whether that was a blessing or a curse. He may have become a big time trader in movies, coins, and records. Or he may have become a spending addict buying all kinds of things on the web that he couldn't afford and didn't need. Don had a small town attitude but was pretty sophisticated about coins and collectibles so I tend to think he would have tended to the former but it remains yet another thing I'll ever know.
Another thing Don was passionate about was Alcoholics Anonymous. Don was a long time member and used to sponsor other recovering alcoholics. I never saw Don take a drink and he didn’t talk very much about his drinking days but he seemed to take pride in his mentoring other alcoholics. I never belabored the point and since I haven’t had a drink in over 25 years I wasn’t someone in need of mentoring. Was Don a falling down drunk who was saved by AA or a guy who occasionally had a drink he shouldn’t have? It is just another thing I’ll never know.
Don loved Texas. He had spent some time there in his youth and he talked about it with so much joy I would constantly forgot that he was born and bred in Iowa and not a Texas transplant. I think he moved there to be with some family that moved back to Iowa and he moved back with them. Don always enjoyed our beagles but was a cat person himself. He always had an indoor cat and would occasionally feed the outdoor cats. He had a cat when he died which was gone when Kathy looked for it.
When Don had a car accident and the state took away his drivers license Kathy would take him to the grocery store each week and I would see him walking to the Liquor Depot to get Lottery tickets or to the Courthouse to catch a bus. I’d give him a ride if he needed one but I think losing his license was one of the best things to ever happen to Don. He was always kind of overweight and was always short of breath but once he had to walk Don stopped being short of breath and seemed to be in much better shape than before. I think it added years to his life and quality to those years as well.
So that’s the Don I knew. There were a lot of things I knew about him and a lot of things I didn't and never will know about him. He was just a normal guy who had a pretty simple life that was full of the things that interested him. I always enjoyed talking to him about movies and coins and such and wish I had more time for stuff like that. While I know he didn’t die in the ‘comfort’ of his home I do know he had a comfortable life.
Last week Kathy couldn’t take Don to the grocery store on Monday because the kids were heading back to school from their winter breaks and she was going to spend all day driving 110 mile round trips to the airport. She called Don’s cell phone and left a message that she would be going grocery shopping on Tuesday. This was not an unusual occurrence and Don would call if he was out of eggs (Don would eat 4 eggs for breakfast every day) and we would pick up what he was out of.
On Tuesday Kathy went to the garage to go grocery shopping and Don wasn’t waiting by his back door. Kathy went to Don’s back door and knocked but there was no answer. She opened the door and called Don and found him face down on his bathroom floor. Don has passed away sometime over the weekend. Kathy called the police and Don’s nephew to let them know. We looked for the next couple of days for the obituary to be in the paper and finally there it was and the first sentence was:
Donald “Don” Hornberg, 84, of Marshalltown, Iowa, passed away on Tuesday, January 10, 2017, in the comfort of his own home.
Well, there you have it! Someone found dead on their bathroom floor actually ‘passed away…in the comfort of their own home’. I was never in Don’s house but I have to think he had more comfortable furniture than his bathroom floor. I read the rest of the obituary (and you can too by clicking here) but had a hard time getting past the fact that if the very first sentence was hardly the truth how much of the rest of the obituary could be believed. So since I have had way too much experience in writing obituaries this past year I thought I’d write what I knew about Don and at least it would be the truth.
Don never married or had kids and lived in a rundown house next to mine for the last 30 or so years. As I mentioned Don worked in the sanitation department of the local hospital for many years. He liked working there and would tell me that how well he was treated by the big shots at the hospital and when he got sick the doctors would give him sample medications to save him the expense of buying it himself. I have been sorely tempted to make the hospital a source of ridicule in the Broken Pawn. They spent a fortune to rebrand themselves from the Marshalltown Medical & Surgical Center (a name that makes it readily apparent where you are and what you do) to the ambiguous Central Iowa Healthcare. Then they spent $35 million on 'Phase 1' of a new facility on the south side of town two years ago. All this spending led to bad press when the emergency room doctors quit because they weren’t being paid. Eventually the CEO had to resign and the hospital recently filed for bankruptcy. And this is a non-profit hospital! But I never trained my sights on this hospital because of Don’s stories about how well he was treated.
Don’s main passion was pop culture. He loved movies, country music, and coins. He was the first person on the block to have a satellite dish and he subscribed to 5 HBO channels so he would be sure not to miss any of their featured films. He recorded movies on tapes and later DVD’s and would order collections of his favorite television shows. His favorite show was ‘Smallville’ but he enjoyed all the superhero shows like ‘Agents of Shield’ and when a new superhero movie came out would go to see it with us or by himself. Don was an avid coin collector and would get the mint set of each year’s coins. He had a few silver and gold coins but didn’t talk too much about them. Every couple of Christmases he would get our kids a set of mint coins for the current year. Collectibles never seem to be worth what the owner thinks they are so I don't know how much Don's coin collection was worth except it was worth a lot to him. A lot of single guys who never get married end up with a lot more money than anyone would ever expect. I doubt Don was one of those guys although it wouldn’t surprise me either. One thing I’m sure of is that I’ll never know.
Don never owned a computer or used the Internet. I don't know whether that was a blessing or a curse. He may have become a big time trader in movies, coins, and records. Or he may have become a spending addict buying all kinds of things on the web that he couldn't afford and didn't need. Don had a small town attitude but was pretty sophisticated about coins and collectibles so I tend to think he would have tended to the former but it remains yet another thing I'll ever know.
Another thing Don was passionate about was Alcoholics Anonymous. Don was a long time member and used to sponsor other recovering alcoholics. I never saw Don take a drink and he didn’t talk very much about his drinking days but he seemed to take pride in his mentoring other alcoholics. I never belabored the point and since I haven’t had a drink in over 25 years I wasn’t someone in need of mentoring. Was Don a falling down drunk who was saved by AA or a guy who occasionally had a drink he shouldn’t have? It is just another thing I’ll never know.
Don loved Texas. He had spent some time there in his youth and he talked about it with so much joy I would constantly forgot that he was born and bred in Iowa and not a Texas transplant. I think he moved there to be with some family that moved back to Iowa and he moved back with them. Don always enjoyed our beagles but was a cat person himself. He always had an indoor cat and would occasionally feed the outdoor cats. He had a cat when he died which was gone when Kathy looked for it.
When Don had a car accident and the state took away his drivers license Kathy would take him to the grocery store each week and I would see him walking to the Liquor Depot to get Lottery tickets or to the Courthouse to catch a bus. I’d give him a ride if he needed one but I think losing his license was one of the best things to ever happen to Don. He was always kind of overweight and was always short of breath but once he had to walk Don stopped being short of breath and seemed to be in much better shape than before. I think it added years to his life and quality to those years as well.
So that’s the Don I knew. There were a lot of things I knew about him and a lot of things I didn't and never will know about him. He was just a normal guy who had a pretty simple life that was full of the things that interested him. I always enjoyed talking to him about movies and coins and such and wish I had more time for stuff like that. While I know he didn’t die in the ‘comfort’ of his home I do know he had a comfortable life.
Friday, January 13, 2017
The Five People I Don't Want to Meet in Heaven - Part 1
I can’t say I’ve ever thought about what five people I would meet in heaven based on the premise of the book but I’ve often met certain people where the thought crosses my mind how I hope I don’t ever meet them again. Then I start to think that if I went to hell I would probably be around these people all the time. I wanted to write about some of them but I’m normally a pretty positive person so I figured instead of calling this series of posts ‘The Five People You Meet in Hell’ and writing it in a sort of ‘No Exit’ Sartre-esque vein ("Hell is — other people"), I would instead call these people the ones I don’t want to meet in heaven:
“Heartless”
A couple of weeks ago Kathy and I were taking Daisy and Baxter on our Saturday noon time walk that winds around town and through an alley that leads to a parking lot by some businesses. While we were walking through this familiar guy was trolling through the dumpster that each business has. I’ll call him ‘Dumpster Dave’ for lack of a better name. Dave has a bicycle with a trailer and is a regular around all the area dumpsters. Most of the time he doesn’t talk to me but when he does he calls me ‘sir’, tells me a tale of woe, and asks me if I can spare a dollar or two. Sometimes I give Dave some money and sometimes I don’t. When I've dropped a George or two Dave would thank me and if I didn't he would move on to the next person or dumpster on his rounds. One time Dave tried to sell me a broken 78 rpm record he found in a garbage can and I gave him a dollar and even left him his broken 78 rpm record to try to sell to someone else. Once Dave was featured in the newspaper for finding a copy of a local newspaper featuring the 1969 moon landing (which was as big a deal for that generation as the Kennedy Assassination, Pearl Harbor, and 9-11 were for theirs). With his wayward beard and shaggy unkempt gray hair to go along with his dumpster diving and panhandling ways Dave gives off an aura of poverty and/or mental disease which juxtaposes oddly against the his nearly new Carhartt jacket, sturdy boots, and while not an overweight man certainly not emaciated.
Well on this particular Saturday Dave saw Kathy and I walking. We were the only people in the alley even though it is a convenient shortcut that people that live east of North Center St use to get their cigarettes and cans of Steel Reserve from the Liquor Depot. It must have been a poor day for dumpstering so Dave yelled from a block’s worth of dumpsters away “Excuse me Sir!” and started running over to me. I knew what was coming and Daisy and Baxter were already starting to bark and howl so I yelled back “Sorry I can’t help you”. I was having a nice walk on a Saturday which I didn't want interrupted by trying to listen to Dave's tale of woe over the incessant barking of my beagles. Dumpster Dave must have been pretty upset because as he trudged back to the dumpster where he left his bicycle and trailer he yelled “I should have known better than ask a heartless guy like you for anything!” which was decorated with some expletives unsuited for a family friendly blog like mine.
I guess Dumpster Dave didn’t remember me as someone who’s dropped a buck or two on him in the past. Maybe he thought I was the kind of guy who would be overcome by guilt and run to payday loan to line his pockets or maybe he thought I’d run over and try to punch him is he could sue me and get on easy street but he was wrong on all counts. I've never felt like I was paying my way to heaven or building up Karma by giving someone a buck or two and I've never thought too much about saying no to the same requests - I kind of go where the spirit moves me. I just continued on our walk and on the next block asked Kathy how she could have married such a heartless guy like me. The next afternoon I was walking Daisy and Baxter (without Kathy). I was listening to music from my amazing iPod with my headphones on heading south and as I passed the iconic Liquor Depot who should I see heading towards me on his bicycle but Dumpster Dave! I turned up the volume on my headphones and if Dumpster Dave had anything to say I didn’t hear it but I doubt he even remembered me since he never looked at me but headed straight into the Depot. I didn’t wait to see what he came out with but my money is on a couple of cans of Steel Reserve. The next time I see Dumpster Dave will be too soon. I don't care if I'm thanked for doing something but I sure don't want to be cursed out for saying no to someone. Dumpster Dave's seen his last buck from me and if he ever calls me heartless again I’ll tell him he’s wrong because when it comes to him I do have a heart – a heart of stone!
Now don’t get me wrong – When I say that Dumpster Dave is one of the five people I don’t want to meet in heaven I am NOT saying he won’t be in heaven or that I will be in heaven. After all Jesus said “Blessed are the poor” or “Blessed are the poor in spirit” (depending on the version and translation and etc...) so Dave probably has a better shot than me despite his sturdy boots and Carhartt jacket. All I’m saying is that if I should happen to get to heaven one of the five people I don't want to meet is Dumpster Dave!
Thursday, January 5, 2017
Born To Lose
Last September I wrote about using my self-directed 401k to dip my toe into the waters of buying Intel stock and immediately selling an option to another party to buy the same stock for less than I paid for it at a future date with the price I collect for the option netting me anywhere from 1% to 3% on my original investment after covering the loss from the sale of the stock. In my September article I told how I had bought 200 shares of my favorite Intel stock at $35.07 on August 19th, collected $1.89 a share to allow another party the option to purchase the 200 shares at $34.00 any time before October 21st and said I’d see how it all worked out on October 21st. The day I wrote that post the price of Intel went over $36 a share and on September 19th went to $38 a share. I was pretty pleased at this turn of events since it meant that it was almost a sure thing that my option would be picked up on October and I would have succeeded in getting a 2% profit for a 2 month investment.
Intel remained between $36 and $38 a share through the rest of September the first part of October until October 18th when their quarterly earnings announcements met with the displeasure of the investing public and the stock plummeted from a high of $38.05 to $35.15 at the close of the trading on October 21st. Since the stock was trading above $34 a share, my option was exercised on the 21st and I closed this trade with a profit of $139.90 or 70 cents a share for owning a stock for 2 months that had risen by the grand sum of 8 cents!
On Monday October 24th I again went looking for another stock to buy, sell at a loss, and still make a profit by selling the option to sell at a loss. I didn’t have to look much further than the INTC page on the fidelity app on my amazing iPod. I bought 300 shares of Intel at $35.395 a share and sold an option to sell the stock for $33 a share on January 21st, 2017. I collected $2.84 a share on the option which means that if my option was exercised in January I would have a profit of $115.21 or 1.08% on my 88 day investment. It would be fair to compare this with my August-October buy/sell and notice that I was investing my money for an extra month for half the percentage. I did this for two reasons. The 8% drop of Intel in the previous week lowered the option prices and made me a little skittish myself which is why I decided to sell at $33 instead of $34 (also known as the strike price). The other reason is that Intel issues a dividend on December 1st payable to stockholders on November 3rd. This means that my profit (assuming the option isn’t called early which it was not) increased on December 1st by $78 (300 shares x a .26 dividend) to make a grand total of $193.21 or 1.82% which to me is a reasonable if not spectacular profit on a very low risk proposition that Intel will sell at or above $33 on January 21st or at least the break-even mark of $32.41.
Intel stayed between 34 and 36 for the rest of October, dipped below 34 the week of the election but quickly rebounded over 35 once everyone realized the world wouldn’t end just because Donald Trump was elected president. After flirting with 36 on early December I decided to make another move into losing territory. On December 12th I bought 300 more shares of Intel at 35.965 and sold the option to sell the shares at $35.5 on January 6th for a premium of 98 cents a share. This is a much riskier proposition than the other option plays because the stock could easily drop under 35.5 in one day much less 4 weeks and the reward is a smallish 1.26% which looks a lot better when taking into account the short time frame. In the last 3 weeks Intel has stayed well above $35.5 so I think I will get away with this play. When I review this I’m of the opinion that it was too risky a move. Intel is a great stock to own under any circumstances but the chances of the stock finishing below the break even point of $35.07 doesn’t seem worth the 1.26% reward. The experience has given me a better handle on my risk tolerance and even if I do get away with the play I won’t be too likely to repeat this particular short term scenario.
Another of my favorite stocks is Emerson Process Management (EMR) and that company has proven to be a much more profitable play in the short term risk scenario. Long time blog readers may remember that I bought 100 shares of this company in December of 2014 at $61.44 and while the stock has drifted below 50 in 2015 and 2016 I was able to keep my losses manageable by collecting a 47 to 48 cent dividend and selling options at a strike price of $60 or higher when possible. My current break-even point on this stock is $54.50. The stock caught a second wind in the second half of this year and has drifted in the $48-$58 range with wild swings depending on current events and analysts opinions on the status of the company. On October 12th I noticed an anomaly between the stock price and the option price and made a move, buying 100 shares of EMR at $49.995 and collecting $142 for selling the option to buy the stock for $50 on or before November 18th. The stock drifted between $49 and $51 for a few weeks and closed at $50.38 on November 7th which is an important date because on November 8th Emerson gave a 48 cent dividend. My option wasn’t picked up so I collected an extra $48 (payable on December 10th). From November 8th to November 18th, Emerson leaped over 8% from 49.85 to 54.20 a share. On November 18th my option was exercised and I sold 100 shares of Emerson that was valued at $54.20 a share for $50. I didn’t feel like much of a loser since I made $178 (3.57%) on a five week investment.
On the Tuesday after my EMR option was exercised I used the same money to do it all over again. On November 22nd I bought 100 shares of EMR for $54.70 and made $141 by selling the option to buy the stock at 55 on or before January 20th, 2017. In the month and half since I executed this trade Emerson’s price has vacillated between $54.40 and $58.30. If the option is exercised in two weeks I’ll have made 2.68% for a two month investment which isn’t as good as my October buy but still worth the risk.
I don’t write about these adventures to brag – I write about them because it helps clarifies my thoughts, it may be of use for other people to read, and I get the occasional idea I hadn't thought of delivered to my email inbox. Keep in mind I am not gambling with my rent money – I am using 401k money that I can’t touch without paying taxes and penalties and there is always the real possibility that a stock will tank and I'll be stuck holding it for years (making it super important to play this game with solid dividend paying companies). I liken this playing with the stock market very much like my picking NBA basketball games in that I am trying to find a workable system. I don’t know how this selling at a loss idea will work in a down or sideways market but as long as I am betting on solid companies with a long history of paying dividends I suspect I won’t go too wrong.
Intel remained between $36 and $38 a share through the rest of September the first part of October until October 18th when their quarterly earnings announcements met with the displeasure of the investing public and the stock plummeted from a high of $38.05 to $35.15 at the close of the trading on October 21st. Since the stock was trading above $34 a share, my option was exercised on the 21st and I closed this trade with a profit of $139.90 or 70 cents a share for owning a stock for 2 months that had risen by the grand sum of 8 cents!
| 8/19/2016 | Buy 200 INTC @35.0758 | -7023.11 | |
| 8/19/2016 | Sell 2 INTC Option @34 (.95) Expiring 10/21/2016 | +386.46 | |
| 10/21/2016 | Sell 200 INTC @34.00 (option was exercised) | +6794.55 | |
| Total | +139.90 | 1.99% |
On Monday October 24th I again went looking for another stock to buy, sell at a loss, and still make a profit by selling the option to sell at a loss. I didn’t have to look much further than the INTC page on the fidelity app on my amazing iPod. I bought 300 shares of Intel at $35.395 a share and sold an option to sell the stock for $33 a share on January 21st, 2017. I collected $2.84 a share on the option which means that if my option was exercised in January I would have a profit of $115.21 or 1.08% on my 88 day investment. It would be fair to compare this with my August-October buy/sell and notice that I was investing my money for an extra month for half the percentage. I did this for two reasons. The 8% drop of Intel in the previous week lowered the option prices and made me a little skittish myself which is why I decided to sell at $33 instead of $34 (also known as the strike price). The other reason is that Intel issues a dividend on December 1st payable to stockholders on November 3rd. This means that my profit (assuming the option isn’t called early which it was not) increased on December 1st by $78 (300 shares x a .26 dividend) to make a grand total of $193.21 or 1.82% which to me is a reasonable if not spectacular profit on a very low risk proposition that Intel will sell at or above $33 on January 21st or at least the break-even mark of $32.41.
| 10/24/2016 | Buy 300 INTC @35.395 | -10626.45 | |
| 10/24/2016 | Sell 3 INTC Option @33 (2.84) Expiring 1/20/2017 | +841.66 | |
| 11/3/2016 | Dividend INTC (Payable 12/1/2016) | +78.00 | |
| 1/20/2017 | Sell 300 INTC @33.00 (if option is exercised) | +9900.00 | |
| Total (If option is exercised) | +193.21 | 1.82% |
Intel stayed between 34 and 36 for the rest of October, dipped below 34 the week of the election but quickly rebounded over 35 once everyone realized the world wouldn’t end just because Donald Trump was elected president. After flirting with 36 on early December I decided to make another move into losing territory. On December 12th I bought 300 more shares of Intel at 35.965 and sold the option to sell the shares at $35.5 on January 6th for a premium of 98 cents a share. This is a much riskier proposition than the other option plays because the stock could easily drop under 35.5 in one day much less 4 weeks and the reward is a smallish 1.26% which looks a lot better when taking into account the short time frame. In the last 3 weeks Intel has stayed well above $35.5 so I think I will get away with this play. When I review this I’m of the opinion that it was too risky a move. Intel is a great stock to own under any circumstances but the chances of the stock finishing below the break even point of $35.07 doesn’t seem worth the 1.26% reward. The experience has given me a better handle on my risk tolerance and even if I do get away with the play I won’t be too likely to repeat this particular short term scenario.
| 12/12/2016 | Buy 300 INTC @35.9657 | -10797.65 | |
| 12/12/2016 | Sell 3 INTC Option @35.5 (.98) Expiring 1/6/2017 | +283.67 | |
| 1/6/2017 | Sell 300 INTC @35.50 (if option is exercised) | +10650.00 | |
| Total (If option is exercised) | +136.02 | 1.26% |
Another of my favorite stocks is Emerson Process Management (EMR) and that company has proven to be a much more profitable play in the short term risk scenario. Long time blog readers may remember that I bought 100 shares of this company in December of 2014 at $61.44 and while the stock has drifted below 50 in 2015 and 2016 I was able to keep my losses manageable by collecting a 47 to 48 cent dividend and selling options at a strike price of $60 or higher when possible. My current break-even point on this stock is $54.50. The stock caught a second wind in the second half of this year and has drifted in the $48-$58 range with wild swings depending on current events and analysts opinions on the status of the company. On October 12th I noticed an anomaly between the stock price and the option price and made a move, buying 100 shares of EMR at $49.995 and collecting $142 for selling the option to buy the stock for $50 on or before November 18th. The stock drifted between $49 and $51 for a few weeks and closed at $50.38 on November 7th which is an important date because on November 8th Emerson gave a 48 cent dividend. My option wasn’t picked up so I collected an extra $48 (payable on December 10th). From November 8th to November 18th, Emerson leaped over 8% from 49.85 to 54.20 a share. On November 18th my option was exercised and I sold 100 shares of Emerson that was valued at $54.20 a share for $50. I didn’t feel like much of a loser since I made $178 (3.57%) on a five week investment.
| 10/12/2016 | Buy 100 EMR @49.955 | -5003.45 | |
| 12/12/2016 | Sell 1 EMR Option @50 (1.50) Expiring 11/18/2016 | +142.00 | |
| 11/8/2016 | Dividend EMR (Payable 12/9/2016) | +48.00 | |
| 11/18/2016 | Sell 100 EMR @50.00 (option was exercised) | +4991.94 | |
| Total | +178.49 | 3.57% |
On the Tuesday after my EMR option was exercised I used the same money to do it all over again. On November 22nd I bought 100 shares of EMR for $54.70 and made $141 by selling the option to buy the stock at 55 on or before January 20th, 2017. In the month and half since I executed this trade Emerson’s price has vacillated between $54.40 and $58.30. If the option is exercised in two weeks I’ll have made 2.68% for a two month investment which isn’t as good as my October buy but still worth the risk.
| 11/23/2016 | Buy 100 EMR @49.955 | -5478.06 | |
| 11/23/2016 | Sell 1 EMR Option @54.7011 (1.41) Expiring 1/20/2017 | +133.00 | |
| 11/18/2016 | Sell 100 EMR @55.00 (if option is exercised) | +5491.94 | |
| Total (if option is exercised) | +146.88 | 2.68% |
I don’t write about these adventures to brag – I write about them because it helps clarifies my thoughts, it may be of use for other people to read, and I get the occasional idea I hadn't thought of delivered to my email inbox. Keep in mind I am not gambling with my rent money – I am using 401k money that I can’t touch without paying taxes and penalties and there is always the real possibility that a stock will tank and I'll be stuck holding it for years (making it super important to play this game with solid dividend paying companies). I liken this playing with the stock market very much like my picking NBA basketball games in that I am trying to find a workable system. I don’t know how this selling at a loss idea will work in a down or sideways market but as long as I am betting on solid companies with a long history of paying dividends I suspect I won’t go too wrong.
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