Tuesday, August 12, 2008

Analysis Sheet -- Updated

NOTE: PLEASE BE PATIENT -- IT TAKES APPROX 15 SECONDS FOR THE SPREADSHEET EMBEDDED IN THIS POST TO LOAD BEFORE YOU CAN NAVIGATE THIS BLOG SITE!!

In a prior post last November, the 'Analysis Sheet' used by the Covered Calls Advisor to analyze the relative worthiness of a particular covered calls investment was presented. As mentioned then, the 'Analysis Sheet' is a 'work in progress' in the sense that periodic refinements are made to the sheet to reflect this advisor's preferences as to the most important indicators and their relative importance in analyzing a potential covered calls investment.

Recently, there have been several posts on the Yahoo!Groups 'justcoveredcalls' site related to which factors should be used when analyzing a potential covered calls investment -- several people are searching for a disciplined, objective, and quantitative decision-making approach that incorporates a variety of indicators (aka metrics) in their own analysis. This is encouraging to this Covered Calls Advisor because it is precisely the approach advocated here.

Below is an 'Analysis Sheet' for this advisor's current largest position, which is in Microsoft:



This 'Analysis Sheet' includes 37 financial metrics in 9 categories, which is a much more detailed approach than most investors would be willing to undertake. But for those of you who are seeking a more objective, quantitative approach to your covered calls analysis process, reviewing the categories and the financial metrics on the spreadsheet above should give you some ideas that you might consider including as part of your own analysis.

As always, I welcome your comments or questions.
Simply click on the 'comments' link below to provide your feedback.

Regards and Godspeed to All,
Jeff

3 comments:

  1. Jeff ... I like your Stock Analysis Excel sheet. And it looks very comprehensive. My only comment is you should go to the internet and get the data automatically. It would save a lot of time. Try using smf_addin on the Yahoo Group. He has developed an addin to get the data from the internet.
    Richard

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  2. Great Sheet and I like the more comprehensive version over the shorter version. If you use the SMF_addin fuctions, it should be able to update most items from the internet.

    Question is however, how do you recommend using the summary of results for decision making?

    What is the threshold to going forward with a Covered call on a position and what do you feel is too weak an indicator?

    Do you still move forward with so many NO values in Achieve even though the total is 100.5? Are all metrics equally weighted?

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  3. Regarding the Summary section, if the Total Points is greater than or equal to 89, then a YES is indicated for that category; and that is sufficient validation to establish a position, regardless of how many individual NO categories exist.

    Each metric has its own weighting. For example, you can see that ARIU is weighted higher than other categories since it has a max point value of 26. Compare that against other metrics -- max value for Downside Breakeven Protection is 18; max for Dividend Yield is 3; etc. The point value ranges for each metric is based on my own personal preferences as to the relative importance of each metric.

    Regarding SMF_addin, I would love to use it to capture most data; however I'm not as computer savvy as I would like to be and would need assistance to help me upgrade to that level of sophistication. In that regard, volunteers are definitely welcomed!

    Jeff

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