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Last month, we decided we were going to sell in May and go away in our special update (regular update was here).

We had turned bearish on the market by the 12th, perhaps a little early but it gave us plenty of time to make good exits and get our prices. Since our Income Portfolio was running 100% ahead of schedule and more like 250% counting the unrealized gains from our buy/writes as the market zoomed higher on us, we decided it would be good to go back to cash – especially as it would be fun to build a brand new Income Portfolio for 2012 that our newer Members will be able to benefit from following as well as it is, by far, our most popular virtual portfolio.

We’re not cashing it all out as some positions still need to run their courses, but we won’t be upset to be cashed out on some so we covered conservatively in anticipation of the pullback that just began last week. We had $97,716 in realized (albeit virtual) gains as of our March 10th update – not bad after 10 months with a $500K portfolio that was only looking to take out $4,000 a month!

This is the kind of set-up that my Mom and many of her friends need to do to supplement their not very generous Social Security checks but it’s also using the same principle that applies to any long-term wealth-building strategy, utilizing our best long-term growth strategies combined with a concentration on generating an income collecting dividends and selling short-term options to create our own “dividend” stream on ordinary stocks. Please see previous posts in our Virtual Portfolio section for our main strategy discussions – this is just an update.

Dividends20052007.gifThis month was unusual as we had quite a few action items, mostly per the Special Update, the following positions were closed:

  • 10 GE Jan $17.50 puts sold for $2.10, closed at now $1.30 – up $800
  • 20 RIMM 2014 $22 puts at net $3.52, closed at $10.10 – down $13,160
  • 3,000 NLY .55 dividend paid on 3/28 – up $1,650
  • 10 TITN March $22.50 puts sold for $4.50, expired worthless – up $4,500
  • 1,500 NYB at net $8.70, out at $10 – up $1,950
  • 10 TM Jan $62.50 calls bought for $6.50 ($6,500), out at $23.20 – up $16,700
  • 1,000 CSCO .08


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