Cashflow Report – Portfolio Income During October 2012

Welcome to the Investing for Cashflow Report – October 2012 Edition!

Each month, I review the portfolio income (i.e. paper income or income from investments) created from trading covered calls and create a “cashflow report” (hat tip to Pat Flynn over at Smart Passive Income). Analyzing trades is something every investor/trader should do on a regular basis, so this is my attempt to practice what I preach. The reports 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


Overview of October 2012

The geneal markets (DJIA, NASD, SP500) entered a downtrend in October after running into institutional selling early on. And we had a shortened trading month with the markets closed in the aftermath of Hurricane Sandy.

After moving sideways for half the month, DRN solidified a new downtrend, as did ERX. EDC and FAS continued to find support around the 90 and 110 dollar level, respectively. TMF seems to have found support around $70 and may be ready to start a new uptrend in November.

Insights & Lessons Learned in October

My new method for creating trendlines appears to be working.  I avoided a capital loss of at least 10% last month on ERX.  I’m hopeful that it will work just as well on the profit side!  However, my trading will be less consistent, meaning that I won’t always be in the market.  I’m not sure how that will affect my ability to make money each month.

Cashflow Report – Portfolio Income During October 2012 – Breakdown:

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

Premiums = $0.00
Dividends = $0.00

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

Premiums = $0.00
Dividends = $0.00

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

Premiums = $0.00
Dividends = $0.00

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

Premiums = $0.00
Dividends = $0.00

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

Premiums = $0.00
Dividends = $0.00

Cashflow = $0.00
October Capital Gains/Losses = $50.31

Goal Not Achieved

After all was said and done last month, I ended up with a $50 capital gain on my ERX trade. Not even close to my goal, but it wasn’t a loss either!

Bar chart showing year to date returns from covered calls
GOAL: Execute a covered call trading strategy that creates PROFIT greater than $3,600 USD per month and deposits $3,600 USD per month into an expense account, for 3 months straight.

The Road Ahead

I’m continuing to monitor EDC and FAS.  They’re both close to my trendlines, so now is a good time to enter a position.  But only two weeks left to option expiration for November, I’ll have to make sure that the premiums will cover potential losses.

Related Posts

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

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