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Saturday, October 26, 2013

To Convert or Not to Convert?

Traditional to Roth?

Today I have been spending a lot of time researching different investment accounts and what works best for me in my current tax  bracket.  As of now I have 1 traditional IRA, 1 simple IRA, and my wife has a traditional IRA rolled over from her old 401k.  I think at this point in our life, and income bracket a ROTH IRA makes the most sense.   Especially because of the aggressive nature of my investments the non taxed earnings on investments seems attractive.

Action Plan:

1.)  I need to see how close I am to the top of my tax bracket with my regular income and convert accordingly as not to push myself into a higher tax bracket.  At this point it looks like I can convert about $10,000 before that additional "income" will push me over the threshold.

2.)  I have some capital loss carryovers  from my individual trading account that will allow me to reduce my income and convert a little bit more. 

3.)  I need to check into if the conversion money is treated as a contribution?  This would allow me to withdraw that amount at any time, if I see alternative invests that I am unable to fund through an IRA.

Friday, October 25, 2013

I started this blog, not only to keep track of my investment ideas as I have them, but to create a space where people like YOU could follow, comment and learn along with me.   I will be making posts periodically as I ponder on what investments to purchase, sell or watch and how my trades have performed.  I guess we will go ahead and get started!!

Week of October 21 - 25:

Recap by account:

Individual Account:  I held BBY short from a sell last week at $43.00 and added some weekly puts at a $43 strike on Monday.  I ended up taking a $0.25 loss on the options since the stock did not underperform like I thought it would.  I am still holding the short position and looking for a scaled exit from $40 down to $37.  My thesis behind the bearishness in Best Buy is that with all of the other brick and mortar electronic stores faltering this week and the massive run that BBY has experienced over the last 10 months, this stock is due for a sizable pullback.  I chose the $37-$40 range for my cover since there is a large, open gap there from the last earnings report and gaps ALWAYS get filled.  These areas seem to attract support and resistants.  We will see what Monday has in store and may add some $42 puts (weeklys) to the trade for some juiced leverage.  Here was Aarons and Radio Shacks performance last week:

Not sure if we can compare BBY and AMZN but here was Amazon after is reported:
As you can see it created a massive gap and is well above its upper Bollinger band.  Also the RSI has crept into overbought area.  Now I have seen stocks that hug the top Bollinger band until the moving averages catch up and the bands tighten, staying in overbought territory for months on end, but I think with the market frothiness we are in, AMZN may just be a good short for at least 5-8% as the market weakens into November.

Traditional IRA:  I held a position in NUGT since $38.50 area, BAA since $0.68.  I use this account for an aggressive approach to my retirement savings.  I have doubled the account value every year for the past 3 years since I started investing it on my own.  Not to say that I have not had bad months but so far things have been working pretty well.   Anyway,  I sold some $54 calls against my NUGT position on Tuesday for a whopping $1.50 (way to early).  I was hesitant to buy them back on Wednesday and this morning since my strategy was to keep the premium and hopefully the $54 calls would expire worthless.  That did not happen so this trade had netted me a 40% gain in less than a couple weeks, not counting the $1.50 premium.  My strategy on Monday will be to see which way the miners trade in the am and load up some puts or calls depending on the direction and try for position in DUST for the short term.  As far as my BAA trade, I have roughly 5% of my portfolio in it, and I am going to let it ride.  I think if we get a run in gold up to the $1500 area this miner could be in the $4 to $5 range. 

My Wife's Traditional IRA:  She is holding some SAND from the $5.10 area along with some $7.50 December calls to juice the returns.  Not much going on there. 

As of now I am playing the gold miners pretty heavy, and watching the refining stocks for a short entry once they start to report.  More on that later.