January 2017 Update

IMG_7583General Comment
January was quite an eventful month, it doesn’t just mark the beginning of the year (oh by the way Happy 2017 everyone!!), but it also packed in a new job for me (where I am terribly struggling unfortunately), and a huge review of my spreadsheets after I found some reporting mistakes mostly coming from my option trading.

The new spreadsheet seems to do the job perfectly, there must be a lot that I can improve, but 1 week of solid work it’s more than enough and despite the fact that I could not make automatic calculations to get my tax returns made (I will have to pay an accountant for it), I am happy with the result.

Markets have been buoyant until the mid of the month, then Trump got in the office and it seems that we are seeing a little of a cooldown happening, nothing to be particularly scared about and I used the opportunity to strengthen 2 positions that I already owned.


TR stands for Total Return (what selling everything, paying taxes and commissions and converting to euro would mean in terms of return), YoC is Yield on Cost (what my investments have returned to me via dividends/options), TER is Total Expense Ratio (commissions + taxes).
Total Return is not something I am particularly concerned about at this stage (plus it’s an estimate as I have calculated potential taxes and commissions in it), it’s highly affected by the way the market behaves especially in a young portfolio such as this one. But it’s a metric that it’s worth keeping an eye on. YoC is on the other hand more interesting to me, as that is what the PF has produced over time, my target is to reach the 2% x year net mark (by net I mean YoC-TER).
Month TR TER YoC
11.2015 0.00% 0.00% 0.00%
12.2015 -3.33% 1.27% 1.13%
1.2016 -1.52% 1.39% 1.40%
2.2016 -1.52% 1.38% 1.43%
3.2016 -0.27% 1.48% 1.57%
4.2016 0.73% 1.56% 1.86%
5.2016 1.32% 1.71% 2.37%
6.2016 2.57% 1.90% 3.45%
7.2016 2.61% 1.96% 3.70%
8.2016 4.17% 2.00% 3.97%
9.2016 3.74% 1.97% 4.11%
10.2016 3.20% 2.03% 4.58%
11.2016 4.21% 1.97% 4.16%
12.2016 7.06% 2.02% 4.76%
1.2017 4.76% 2.07% 4.95%

Coming from a record setting month I have seen quite a decline in TR, but I was happy to report a growing YoC despite all the accounting errors. Taxes will start flowing in the next few months, so I expect TER to rise, but that’s part of the game and I can’t complain about it. In the graph below I have added a view of how the YoC stat is now composed, you will see a line with the YoC from Options and a line with the YoC from stocks. The fat yellow line is the total.

Dividends and Options
January started as a DREADFUL month. By the 6th of January, thanks to the new accounting method I was netting a -978 Euro score. Of course that was just from the options that I had to roll, but it was a terrible wake up call (if I ever needed it) on how potentially dangerous these instruments can be.
Well, the good news is that I managed to stop the hemorrhage and I actually ended up in the “green” thanks to my dividends (on the rise compared to 2016, 552 Euro vs 402 Euro), and a great comeback on options (eventually they ended at -73 Euro).
479 Euro is the final total vs. 403 Euro of 2015, marking a 19% rise YoY.
Graphs speak louder than words here:
DCA/Increased Positions
Bought 1000 LON:VOD @ 1.95 GBP
I think Vodafone has all the cards to recover from this valuation that seems to be very low (very close to 52wk low), it’s a solid multinational company, with lots of debts (I have to be honest about it) but it’s a feature that many other telecoms share. This acquisition lowers my average cost.
Bought 20 KMB @ 120.45 USD

The rationale of this purchase is merely linked to the net dividend that I can get, 2%. I was in at a lower value (114) with the first batch, with this second batch (and thanks to the recent dividend increase) I doubled my position in this defensive stock with no real loss of NET dividend yield (and I have double taxation issues here).

New Positions – Sold Positions

Sold 240 LON:PSON @ 5.66 GBP
Dividend cut, Stalflare’s out (big shame, I believed in their re-launch plan), but a rule is a rule, even if it costs a lot of money, like this one.

Sold 100 ORI @ 17.50 USD
Sold through call option. I would have kept it, but I could not roll the option and in the end it got me a decent profit.
Options Plays
Options plays are strategies that I put in play with some stocks where I want to “trap” a dividend and sell the stock immediately after. It doesn’t always work, so sometimes you get to keep the stock for a longer time.
MDT Play – Started 20/12/2016 – Ended 06/01/2017 – 54.99 USD Gain – AROI (16,27%)
F        Play – Started 06/01/2016 – Ended 17/01/2017 – 77.06 USD Gain – AROI (40,65%)
A new year has started, the path is clear and I am actually quite excited and seeing how my trading will improve/change in the future. One year ago I was just about starting to evaluate what to do and what not to do with options, now I am trading them every day (more or less)! Results will come in due time, and if my calculations are correct options can give a definite boost to my returns. At the same time I am strengthening the dividend portfolio, and I am already looking forward to July when a major bond that I hold (Fiat) will expire and I will be confronted with the necessity of reinvesting that part of the portfolio…

8 thoughts on “January 2017 Update

  1. Howcome you account for a loss when rolling options? Did you roll for a debit?

    When I roll, I usuall BTC and then STO at a higher price. I keep all of that in one line in my tracking sheet… It thus stays an unrealized gain.
    Off course, our tax system is easy:there are no taxes on options (yet)

    Liked by 1 person

    1. Ciao ATL,
      Actually I used to think along those ways, but it’s wrong. The option that you open, even if it is for an higher value than the one that you bought, is not closed yet. So in the month in which you are rolling you are actually running a capital loss, because you only have the option that you buy.
      Under the Italian tax system point of view, an option is not taxable until the trade is closed, so the roll is “positive” but I will see that only in 2 months maybe. The loss is immediate on the other side. This point is paramount for my accounts because it changes everything for reporting taxes and of course changes the actual performance of the portfolio. So the major change in accounting with the new excel file checks these points too, and it’s easy to run a loss if you have many rolls in a month. In reality, if all goes well, I am going to have these profits later down the year, so I am not concerned too much, but the loss shows nonetheless…



      Liked by 2 people

    1. Thanks IH, I cannot complain. If some of the options that are stuck get cleared I will post stronger growth on the option income as well (most of them are plays that I started when I also started to trade options so they are fruit of moves that I would not do again in the future).
      Let’s see how it goes! 🙂
      ciao ciao


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