Power To The Elbow

This is going to be my monthly post on how I am progressing toward achieving my goals. I will list the goals for each category and then give a brief update on how things went last month. 

Personal

2 Goals

1. Give the world all the love, respect, and kindness I have. 

January was a really hard month for me personally. I did not sleep much at night. I was not as kind as I aspire to be. I did not always show others the kind of love they deserve. I made some new friendships but they are very new and will die if not cultivated.

I can do better. First, I will show the people I love how important they are to me. Second, I will follow up with new friends and find ways to help them. Third, I will seek out new ways to reconnect with old acquaintances. Finally, I believe that if I do the first three steps, I will sleep more at night. 

2. Create something that makes the world better.

I unsolicitedly emailed 4 production people in an attempt to recruit them to make Beyond the Book Club. The only way this will work is if I network my way into getting someone to take me seriously. 

I began to make a prototype for a hanging light fixture that you can plant flowers/vines in. I think this could be a really cool unique product that would appeal to many people. Next month it is my goal to make a bunch and install them in my house and list them for sale on my Etsy page.

Index Coffee and Books

Goal – Achieve financial solvency

January was a huge step backwards. Year over year revenues were down 21.4%. We added $10550.19 to the loan balance so that we could cover inventory costs. This was particularly disappointing after the record sales we had in December.

The weakness in sales came from two main buckets. First, we were closed on January 1st. Previously New Years Day was a big day for the shop and we missed out on sales that could have added as much as 5%. Second, book sales were very weak in January, essentially coming in at half of December’s total. This is more of a head scratcher. It would be unrealistic to expect December sales to continue year round, but they typically aren’t halved. Our best guess is that the snow and cold kept book customers away where coffee customers were willing to come in to get out of the cold. 

I never like it when CEOs blame the weather for poor sales, but here we are. It is a real thing in January in Cleveland.

February should have much better cash flow. We don’t have any book inventory expenses due. As long as the weather stays mild on the weekends, we should make it through the month without needing any more capital.

I am actively looking at new sources for used books. There is a possibility we can source good condition highly ranked books from internet sellers at prices we can then sell at 50% off in the store. If we did this we would have to sticker these books special and somehow communicate to the customer that those books have a max discount of 50% off. This isn’t insurmountable. We shall see. 

Book margins continue to be excellent. For each dollar of books we sell, we are keeping $.64. We just need to do a lot more of it to cover the fixed costs. 

Investing

January was the first month of active options trading after my 3 year break. I really enjoyed getting back into it. As a whole I collected premium representing 4.18% of the cash balance at the start of the year. This is below the goal of 5%, but still good considering not much went right for me. I tried trading with three specific strategies in January. 

Buzzer Beaters

This is when I sell an out of the money option on the same day that it is expiring. I only sell options that have over a 90% chance of ending out of the money and only when there isn’t any news expected. If the underlying moves against me, I will buy back the option and sell a future dated option for the same or more money, effectively rolling my position forward. 

I executed this strategy 11 times in January. This strategy accounted for 30% of all the premium I collected in the month. I only rolled the position once and that was out of an abundance of caution.

This is a strategy I plan on continuing. 

Calendar Spreads

I entered one calendar spread in January. The theory and strategy worked well. I bungled the exit, leaving me a minimal profit. I ended up collecting less than 1% of my premium from this strategy. I could have made 3 times the profit if I exited the trade correctly.

Next time I need to exit the entire trade at the same time rather than attempt to exit each leg independently. I will hopefully try at least one of these in February. 

Selling Puts

This strategy has the potential to be the most profitable. I sold puts in ON at the beginning of the month. The underlying immediately moved against me and I have been rolling my position forward and down ever since. This is not a problem as long as I have liquidity to support the position. The downside is that I am limited in my ability to sell puts on other securities.

February 5th is an earnings release for ON. This represents a much higher risk or an opportunity to exit. Hopefully, the recent price fall indicates that this will be a sell the news event.

Books I Read in January

Dumb Money by Ben Mezrich

How to be and Adult in Relationships by David Richo

The Greatest Capitalist Who Ever Lived

The Paris Apartment by Lucy Foley

We Were Liars by E. Lockhart

The Magic of Thinking Big by David Schwartz

A Christmas Carol by Charles Dickens

Running

I joined two running clubs this month. I will run with one on Saturday mornings and the other on Sunday mornings. I ran a record total of 168 miles in January. I logged those miles despite a week of not running when I was not sleeping much at night. I think that I might sign up for a race if I find someone in one of these running clubs to do it with me. Pacing someone else would be a good way to make a friend.

Chess

My Blitz rating fell to 1610 from 1622. I played lots of distracted chess on little sleep and my results show it. In order to begin improving again I will need to begin to solve more puzzles on a daily basis.