Follow My Covered Call and Naked Put Trade Strategies

Stocks Purchased

Stock Trades for the Week Ending January 14, 2022

Sunday January 16, 2022

January 11

Capri Holdings (CPRI) – Shares Purchased

Capri Holdings Price Chart

 

January 14

Marvell Technology (MRVL) – Shares Purchased

Marvell Technology Price Chart

 

Closed Trades

Several of the stocks that I had purchased in December and set up trailing stops for were sold recently when those stops were triggered. Reliance Steel was sold based on reaching a holding period of 30 days.

Closed Stock Trades

 


Asset Class Allocations

My tactical asset allocation model currently has allocations as provided in the table below.

Asset Allocations

 

Open Trades

My open trades can always be viewed here.

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Stocks Purchased

Stock Trades for the Week Ending December 31, 2021

Friday December 31, 2021

December 27

Marathon Petroleum (MPC) – Shares Purchased

Marathon Petroleum Price Chart

Below is an example of the position size calculation based on a $250,000 portfolio.

Position Size Calculation

 

December 29

Conocophillips (COP) – Shares Purchased

I already owned shares of COP which I had sold covered calls on. I purchased more shares today but will not be selling callings against these shares.

Conocophillips Price Chart

Below is an example of the position size calculation based on a $250,000 portfolio.

Position Size Calculation

 

December 30

General Motors (GM) – Shares Purchased

I will use an 8% trailing stop for my shares of GM.

General Motors Price Chart

 

Asset Class Allocations

My tactical asset allocation model currently has allocations as provided in the table below.

Asset Allocation Table

 

Open Trades

My open trades can always be viewed here.

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Covered Calls

Stock Trades for the Week Ending December 24, 2021

Saturday December 25, 2021

December 21

Nvidia (NVDA) – Purchased Shares

This was a Tier 1 trade but was a small position given the large ATR.

Nvidia Price Chart

 

December 22

Air Lease Corp (AL) – Shares Purchased

Air Lease Price Chart

 

Risk-Based Position Sizing

I have been asked to demonstrate how I determine the number of shares to purchase so I will provide the details below based on a portfolio size of $250,000.

The first step in my calculation is determining the percentage of my portfolio to allocate to US equities. I use a number of momentum strategies (aka tactical asset allocation) to arrive at allocations for each asset class. Currently, my allocation to US equities is 38%, and thus for my example $95,000 is allocated to US stocks.

The next step is a calculation of the risk value for my US equity holdings which is a personal choice and I am going to use a risk allocation of 5% in my example. I will assume that I will hold stocks in a maximum of six companies. $95,000 x 5% = $4,750. The dollar value of risk per stock position is $4,750 / 6 = $792. I divide $792 by 2 x ATR(14) to calculate the number of shares to purchase. ATR(14) is the average true range of the stock price over the past 14 days. 2xATR(14) is a common value to use when setting a stop loss. The stop loss is generally Purchase Price – 2xATR(14) which in my example is $43.65 – $3.45 = $40.20.

After the purchase is complete, I could set a hard stop loss of $40.20 or a trailing stop loss of 8%. My choice is to select the latter.

Position Size Calculation

If the concept of ATR is new to you, here is a helpful article on the StockCharts site.

 

Covered Calls Update

The table below provides trade details for my recently closed covered calls as well as a summary of covered call trades that I completed in 2021.

Closed Covered Calls

Asset Class Allocations

My tactical asset allocation model currently has allocations as provided in the table below.

Asset Allocations

 

Open Trades

My open trades can always be viewed here.

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COVERED CALL POSTS
NAKED PUT POSTS
SYSTEMATIC TRADE POSTS