Cashflow Report – Paper Income during December 2011

Welcome to my Investing for Cashflow Report – December 2011 Edition!

Every month, I create a “cashflow report” to review the paper income I’ve created from trading covered calls. Analyzing trades is something every investor/trader should do on a regular basis, and I use these reports to do the following:

  1. Help me track my progress towards financial independence
  2. Maintain my focus on increasing paper income and meeting my goals each month
  3. Provide an example of creating an income from investing/trading (actually making money)
  4. Get your feedback on ways to improve

Enjoy!

December 2011 Overview

Heading into December, my group of leveraged ETFs were mounting another assault on the July downtrend and TMF was searching for support. By all appearances, mid-month brought the previously mentioned “Santa Clause” rally to DRN prices. ERX was also able to break its downtrend, but without the conviction of DRN. For EDC and FAS, I still need more convincing price action to declare the downtrends officially over. TMF continues to be range-bound between 60 and 80, while making continually higher lows.

Lessons Learned in December

Back-up your data. ’nuff said.

For a second month, I attempted to use FAS calls to increase cashflow. This month, there were no splits or other events to obscure my test. Instead, the last two trading weeks (Dec. 19 and Dec. 27) were shortened due to the holidays, creating lower premiums.

Dec 05 = $3.40 premium for a Dec. 09 $67.00 Call
Dec 12 = $3.10 premium for a Dec. 17 $62.00 Call
Dec 19 = $2.10 premium for a Dec. 23 $59.00 Call
Dec 27 = $1.32 premium for a Dec. 30 $68.00 Call

The 4 FAS trades for the created a total premium of $9.92 for the month of December. On Dec. 05, a $67 call expiring on Dec. 30 sold for ~$8.50. So selling weekly options on FAS did increase cashflow over selling a one month option on FAS, even with the lower holiday premiums.

Cashflow Report – Paper Income During December 2011 – Breakdown:

DRN-Direxion Daily Real Estate Bull 3X (ETF)

Premiums = $330.00
Dividends = $398.88
Commissions/Fees = ($5.63)

EDC-Direxion Daily Emerging Markets Bull 3X (ETF)

Premiums = $1,080.00
Dividends = $9.21
Commissions/Fees = ($11.28)

TMF-Direxion Daily 20+ Yr Trsy Bull 3X Shares (ETF)

Premiums = $400.00
Dividends = $49.90
Commissions/Fees = ($5.63)

FAS-Direxion Daily Financial Bull 3X Shares(ETF)

Premiums = $1,202.00
Dividends = $0.00
Commissions/Fees = ($28.16)

ERX-Direxion Daily Energy Bull 3X Shares(ETF)

Premiums = $370.00
Dividends = $0.00
Commissions/Fees = ($5.63)

Net Cashflow – December 2011 = $3,783.66

Goal Achieved

Paper Income from Covered Calls

Investing for Cashflow – Performance – 2011-12

GOAL: Execute a covered call trading strategy that creates cashflow greater than $3,600 USD per month, and deposit $3,600 USD per month into an expense account, for 3 months straight.

The Road Ahead

Hopefully, January will bring some established uptrends in DRN, EDC, FAS, and ERX. I think that 2012 will bring some changes in the way that I execute trades, but more on that in the 2011 year in review. Happy New Year!

2011 Cashflow Reports

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About T. Knight
Blogging about my journey to financial independence via investing for cashflow.

One Response to Cashflow Report – Paper Income during December 2011

  1. Love the post will be back again to visit and tell friends about excellent site and original posts.

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