Upcoming Stock Moves in October

Upcoming Stock Moves in October

 

Money Freeing Up

October is set to be a more productive month for the EAF portfolio over all. One third of our stock investment will become free for trading once more, assuming the price of Lowes [LOW] stock remains above $52.50. At that time we will be trying a new strategy moving forward.

Put/Call Selling Numbers

We have been putting together the numbers regarding the output when selling options on Dividend Champion Stock. Unfortunately our numbers are going to be on the lower side then we would like considering that we began the year owning a large stake in Lowes [LOW] from a Put sold late last year. We have proceeded to sell multiple Calls on the stock resulting in net gains of 1.3%. Together with Dividend payments this presents a 2.6% profit from January to October. If the price remains above the Strike then we will also pocket an additional 4% raising my total profit to 6.6% in a year's time. This beats our inflation baseline of 3% rather handily and moves beyond to over 5% which is part of our goal. Ideally we would hit over 10% but given the circumstances beggars can't be choosers.

New Strategy Moving Forward

Selling cash secured options has done very well for us. Holding a 1% yielding blue chip ended up gaining an additional 5.6% over the year with this method. Is that the best we can do with this investment money? I don't believe so. Let me outline our upcoming strategy.

We will be utilizing F.A.S.T. graphs (http://www.fastgraphs.com/) to target a group of blue chip stocks and find attractive targets that are below value. This will protect us from putting our eggs in an overvalued basket like the Lowes trades made late last year. We will buy the stock with as much capital as we have. This allows us to leverage smaller amounts of additional capital and compound at a faster rate as we don't have to bundle stocks into a Contract. I will then set a sell order to dump the stock on a 1% upward swing. The market is fickle and often bounces by 1%. We are going to leverage this ride to maximize turnovers on our investments. Once that investment sells we are going to re-evaluate the available stock, buy another, and begin the process again. Not only does this keep us more involved in the market but it allows us an opportunity for magnitudes of higher growth as the capital will not be stuck waiting for an expiration date.

As for safety, these are again our Blue Chip Dividend stocks. Having to hold one for even an entire year or more will still pay us with dividends so even if we have to hold we will still gain and still be compounding. I can't think of very many other places that your money will grow safely at this rate. I will keep you all updated as this progresses and we go through turnovers on this but I can say, I'm excited to see how well we can leverage it.