I had placed a sell order for 102 shares of AGNC stock with a stop limit of 50 cents, meaning that the sale would be executed when the price went down 50 cents from the peak price AFTER I placed the sell order. The stock drifted a little over $19.50, reached $19.81 and then took a severe downturn whereupon my sell order was executed for $19.31 on September 9th. The stock drifted between 18.50 and 19.50 over the next couple of months and hit a low of $17.53 on December 15th, leaving me feeling very smart indeed about my decision to sell this mortgage real estate investment trust (mREIT) that I really don’t understand. I am feeling a lot less smart about my decision in the last two months since a rise in interest rates with the prospect of more to come has given the stock a second wind to currently trade over $20.50 a share. I kept 11.443 shares of the stock as my profit and still receive $2 a month in dividends so it’s not a financial disaster but more of an opportunity cost due to not understanding this stock since by simply doing nothing I would have made an extra $300 in profits.
Aside from the AGNC misfire, the other three pillars of the FMF have been performing nicely with Phillip-Morris my top performer, Coca-Cola bringing up the rear, and AT&T solidly in the middle with massive fluctuations depending on how the investment public views the prospects of their upcoming merger with Time-Warner. At the time of my last post, the FMF had shown an all-time profit of $1347, down from the high of $1615 on July 6th, 2016. The uncertainty surrounding the election and the surprise election of President Trump sent my stocks into a tailspin and the profits had dwindled to under $500 on November 14th. Then stocks took a dramatic turnaround. My profits went back over $1000 on December 9th, again reached the $1500 mark on February 3rd, and hit a new all-time profit of $1659 five days later. In the next two months I hit 18 new profit records with the latest high of $2377 set on April 18th. Meanwhile I had a decent time getting found money and was able to make 8 buys in my preferred purchase amount of $500.
| Date | Transaction | DJIA | Stock +/- | FMF +/- |
| September 9, 2016 | SELL 102 AGNC @19.32 | 18,085 | 216.63 | 1,037.16 |
| December 5, 2016 | Buy 12 T @38.8062 | 19,216 | 308.56 | 629.82 |
| January 17, 2017 | Buy 12 KO @41.136 | 19,826 | -18.08 | 1,247.29 |
| February 23, 2017 | Buy 5 PM @105.4661 | 20,810 | 779.43 | 1,916.70 |
| February 23, 2017 | Buy 12 T @41.6761 | 20,810 | 629.27 | 1,916.70 |
| March 6, 2017 | Buy 5 PM @110.0419 | 20,954 | 912.27 | 2,011.67 |
| March 6, 2017 | Buy 12 KO @42.245 | 20,954 | 82.87 | 2,011.67 |
| March 6, 2017 | Buy 12 T @41.79 | 20,954 | 640.82 | 2,011.67 |
| March 17, 2017 | Buy 12 KO @42.26 | 20,914 | 67.07 | 2,242.58 |
You may have noticed that even though I sold 100 shares of AGNC on September 9th there were no buys until December and if you did you may have wondered what I did with the proceeds of the sale. I held onto the money and even held out the next three scheduled buys until I had enough cash saved to introduce the FMF to my favorite stock – Intel (INTC) and my favorite strategy of buying 100 shares of a stock and selling a covered call option to sell the stock at a future date for an agreed on price. This is a strategy I’ve been using for three years on my 401k plan and it is a plan that I understand even though it may not be the preferred method of the experts whose strategies I read about every so often.
On November 30th I bought 100 shares on Intel at the market price of 35.16 and immediately collected $55 to sell someone the right to buy the shares for $35.5 on January 6th 2017. Intel dipped to 33.56 the very next day but rebounded in spectacular fashion, breaking $35 on December 7th, $36 on December 12th, and $37 on December 20th before settling between $36 and $36.5 until January 6th at which time my option was called and I sold the stock as agreed upon for $35.5. My profit for the 37-day investment was $72.42 or 2.05%. The next Monday I bought 101 (using some of my profit for the extra share) shares of Intel at $36.70 and made $132 by selling the option to buy the shares at $36 on February 10th. If the option was exercised I would sell the 100 shares and my profit would be $54 after commissions. In The ensuing 32 days Intel went over $37 again on January 20th and reached $38.45 on January 27th before settling back under $37 on January 31st. On February 2nd the stock closed at $36.68 and I was sure my option would be called early since owners of the stock as of February 3rd receive a dividend of 26 cents a share. I was surprised when my option wasn’t called but maybe the experts know more than me since on February 9th Intel went from $36.50 to $35.46 and stayed well below $36 on the expiration day of February 10th.
On February 10th I could have let my option expire but I decided to spend $1.04 to buy back the option to sell another option at $36 that would expire on May 19th. I could have saved the $1.04 by letting the option expire but I wanted to get my next option play in the books before the weekend. I didn’t like going three months out on the new option but that seemed to be the best deal at the time. I could have waited for the option prices to go up on Intel’s next big move up but to me that seemed like gambling (there could also have been a big move down) and I don’t want to gamble – I want to ensure a solid return. I received $97 to sell the option which brought my proceeds on this 100 shares of Intel to $219 in options and $26 in dividends for a grand total of $245 or 6.9% of the purchase price and I still own the stock. If the option is called I will mark up a loss of $70 but I may get another dividend of $27.25 (Intel raised their quarterly dividend from 26 cents a share to 27.25 cents) if the option isn’t called before May 3rd. Here is the complete accounting:
| Date | Transactions | Amount | Shares |
| November 30, 2016 | Buy 100 INTC @35.166 | -3524.55 | +100 |
| November 30, 2016 | Sell 1 INTC Option @35.55 (.63) Expiring 1/6/2017 | +55.00 | |
| January 6, 2017 | Sell 100 INTC @35.50 (Option was exercised) | +3541.97 | -100 |
| January 9, 2017 | Buy 101 INTC @36.695 | -3714.15 | +101 |
| January 9, 2017 | Sell 1 INTC Option @36.00 (1.40) Expiring 2/10/2017 | +132.00 | |
| February 3, 2017 | Dividend INTC (Payable 3/1/2017) | +26.00 | |
| February 10, 2017 | Buy 1 INTC Option @36.00 (.01) Expiring 2/10/2017 | -1.04 | |
| February 10, 2017 | Sell 1 INTC Option @36.00 (1.05) Expiring 5/19/2017 | +97.00 | |
| March 1, 2017 | Reinvested Dividend | -26.00 | +.722 |
| May 19th, 2017 | Sell 100 INTC @36.00 (if option is exercised) | 3594.97 | -100 |
| Total (If option is exercised) | +181.21 | 1.722 |
So if the option is exercised and I sell 100 shares of Intel at $36 on or before May 19th I will show a profit of $181 which is 4.8% AND I would still own 1.722 shares. If the option is not exercised I will own the 101.722 shares of Intel at a net cost of $3,413 or $33.80 a share which is far less than I paid. Currently Intel is hovering between $35 and $36 a share. I have no idea if the option will be called or not. My best case scenario is that the stock stays right around $36 so if the option is exercised I can start the process all over again and if the option is not exercised I will just sell the option all over again and bank more profit. Practically speaking I would have had better results sticking with AGNC but I just don’t understand why the stock price is so high after the company has reduced its dividend from 22 cents to 20 cents to 18 cents a share. I much prefer to stick with Intel and playing the options carousel since it is something I understand even if I must take a much more active role than I like. For completeness sake I will include the status of the FMF as of April 18th.
| Stock | Average Purchase Price | Profit on April 18th | Purchased Shares | Reinvested Shares | Dividend | Quarterly Dividend |
| PM | 92.53 | 1156.71 | 39 | 2.302 | 1.04 | 43.03 |
| KO | 42.67 | 206.00 | 93 | 3.014 | 0.37 | 35.52 |
| AGNC | -.01 | 250.38 | 0 | 12.099 | 0.18 | 6.54 |
| T | 37.36 | 540.20 | 103 | 5.285 | 0.49 | 53.06 |
| INTC | 33.80 | 224.32 | 101 | 0.772 | 0.2725 | 27.71 |
| Total Quarterly Dividends | 165.87 | |||||
| Monthly Dividends | 55.29 |
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