Currently sitting in my little RV at Canyon Hot Springs Campground in Albert Canyon.
Where is Albert Canyon? About 20 minutes west of Rodgers National Park and 30 minutes east of Revelstoke, BC.
What is Albert Canyon? At one time Albert Canyon was a busy little place. It was a small CP rail community. At the peak it had 20 to 30 families, a sawmill, mill shop, general store and a school house. The community was home to the “diesel pushers” that helped push the trains up through a pass. It is a scenic destination where the passenger trains would stop so the passengers could get out and see “Albert Canyon”. Today the “community” consists of a couple of full time residents and another five or six seasonal residents.
Why a trip to Albert Canyon? Last summer when Ryan (oldest son) returned from his spring/summer work in McCarthy Alaska) he arranged to spend his quarantine on a property in Albert Canyon. He was interested in a property that was for sale….so Kim and I drove out to check things out with him. Turned out he didn’t fall in love with the original property but he reached out to another owner and negotiated the purchase of just under 18 acres on the south side of the Trans Canada highway. The property is just acreage. It has never been built on. Guessing it has been 100 years since it was last logged. It has some giant cedars (10 feet around) and all kinds of very large trees. Immediately behind the property is crown land that stretches for miles….the entrance to a playground for Ryan and his back country activities. Albert Canyon is also one of the launch places for Selkirk Tangiers Helicopter skiing …..and where Ryan will be working this winter.
The trip out here was to help construct a shed. The shed was determined to be a priority as he lives either in his van or in a small travel trailer. This was his first “acquisition” and it was going to be followed by a lot of smaller additions that would not do well in his van or trailer (chainsaw, shovel, rake, pick ax, etc) so he thought a shed made sense so he would have somewhere to store his new “toys”.
Ryan was receptive to some help as the help was going to supply many of the tools needed to build the shed. So Kim and I headed west. From our cottage on Sausage Lake it takes five long days of driving (47 hours at regular speeds and we are in an RV). Kim visited with Ryan for a few days then we drove to Kelowna and flew back to Hamilton to attend a wedding in St. Catherines. After the wedding Kim drove back to the cottage and returned to Kelowna and drove back to Albert Canyon. Plans are to help Ryan until late September when I will drive back home to Andover MA for a couple of weddings.
The shed construction is “progressing”. A bit slow but we are making progress. Lots of comments to add on the construction in the next post…..and it has been interesting.
Little background before discussing the account. I am helping my oldest son, Ryan, build a shed on his newly acquired property in Albert Canyon, British Columbia.. The property is about 15 miles west of Rodgers Pass National Park in the Rocky Mountains. It receives up to 40 feet of snow a year….a good thing if you love back country ski touring. Building a shed isn’t that tough an assignment…..unless you decide to do it in the Rocky Mountains on a property with no hydro or water. Battery powered skil saw works okay…..but the charge doesn’t very long when you are cutting “rough lumber” (when a 2 x 6 is really 2 inches by 6 inches). The wood is sourced from a local sawmill in Revelstoke. Some of it Douglas fir…..not a lot of fun to nail as the 3 1/2 nails bend about 50% of the time. Cutting the wood with hand saws….another whole experience. Great for conditioning…not so great for productivity.
YTD the IB Account is generating a return of $76,711 or 22.3%. The performance is similar to what the SPY has generated. No complaints….but it would be nice to outperform the SPY as it would be much easier to just buy the index and hold it!
NIO remains a hard one to figure out. It looks like a good idea…until I establish a position. CFLT has been a nice recent add.
On April 1 we purchased 100 shares of ABT and established a covered call. At the time we were following the bullish comments of CEO during the Q1 earnings call. Initially the stock increased in price (blue line is stock profit/loss). Unfortunately the optimistic comments from the CEO were premature and the company revised earnings and revenue projections causing the stock to drop. Following the drop we added short puts to the strategy as I didn’t mind buying more shares of the company if we got assigned. Profitability of the puts is represented by the orange line. The stock has slowly climbed back. The positions are currently generating a profit of $1,237 between the stock, options and dividends.
Current option position – naked on 3 short puts (Sep 17 $123).
We have also collected $90 in dividends. Overall return is 11.2% or 32% annualized.
Yesterday life was too busy and we didn’t roll up our expiring DVN short calls….so we got assigned. When we entered the position on 5/20 we were planning on collecting the dividend of $.34 (ex div 6/11). Unfortunately the stock got called away. Return on Capital is good so not complaining…but missing $340 of dividends. We will likely reopen a similar position on Tuesday morning to capture the dividend.
Graph below shows the daily profit/loss for the position since opening. The drop in the blue line (stock) and increase in orange line (option) reflects the assignment.
It doesn’t happen often when a CC position is profitable on the stock, option premiums and dividends. Our position in CVS is currently positive with all three. Early on the stock dropped (blue line) so we were losing money on the stock and making money on the options (red line). Recently the stock has run up. In the table at the bottom you can see our option rolls as the stock increased in value. Our rolling could have been more aggressive (higher strikes) as the option profits have declined as the stock pushed higher. We remain bullish on CVS and like the dividend. Plans are to continue rolling the options and hold the stock. On Mar 15 we purchased 300 shares and sold 3 Apr 23 $74 Calls to start the position.
Lumber prices have gone crazy. Rather than complain about the prices we decided to establish a CC on one of the top lumber companies, WY. This “approach” has worked in the past with Peleton. We wanted to buy a Peleton so we set up a CC and paid for the bicycle 50x over. I don’t think WY has the same upside as PTON had but we might make some money and offset some of lumber costs on our porch expansion at the cottage.
On Friday we purchased 500 shares at $38.53 and sold 5 Jun 18 $39 Calls for $2.00. After one day we have made $191…..enough to buy a few boards!
We did look at the charts and liked the entry point. Company financials are in good shape and it pays a dividend that yields 1.75%. Based on the current housing shortage, lack of inventory at building outlets and consumers with lots of money for renovations we plan on holding the position and roll the calls. Q1 results were announced yesterday. We took advantage of the dip to establish our position.
On April 6 we established a CC on PBR when we bought the stock for $8.43 and Sold Apr 16 $8.50 Call for $.17.When we set up CC we were planning to collect the $.29 dividend (ex date Apr 15).
The stock dropped in value after we established the position (blue line in graph). Our $8.50 Call option expired and we wrote Apr 23 $8 Call which we rolled up and out to Jun 4 $8.50 as the stock price recovered.
The $145 in dividends we collected have made this position profitable (black line). Without the dividend we would be losing money. Dividends can make the difference between a winning or losing short term trade. We like the yield on PBR and plan on continuing to roll the options and hold the stock.
With CC’s the profit can come from the short option, stock appreciation up to strike price or from the dividend.
Patience with the VIAC CC is starting to pay off. On April 1 when we established the CC and bought the stock at $45.12 we thought VIAC had hit bottom….but the stock continued to decline (blue line showing profit/loss on the stock). Despite the drop in the stock we resisted the temptation to roll the May 21 $45 Call down. As the stock recovers the short option has remained profitable. Had we rolled down we would have offset some of the gain from the stock recovery. Plans are to keep the position and roll the calls as we approach 21 days to expiry.
The position has become profitable….we can almost buy a case of beer!
We continued with our SPY ladder. As IC’s approached 21 DTE we rolled them out or up and out. . Where possible we did a vertical roll on a few of the IC’s using the credit from the Put side to roll up the Call side (want to minimize any incremental investment so limited the ability to roll) . In most situations we could only roll up the calls a few dollars.
In the graph below you can see an improvement in the return when the SPY fell for a few days…..followed by a decline when the SPY started to rise again.
Little hesitant going into June based on the upcoming dividend. Rolling calls that remain “in the money” will create a risk of assignment and I want to understand the risk associated with assignment.