Margin Challenge – Episode Three – Ford

Grill and headlight of a Ford Edsel.

This will not be a triumphant report of how I am taking the world by storm with my trading acumen. More of an honest update on the margin challenge and the reality of learning the ropes of the market. Episode Two documented the fallout of Ford stock after their brutal earnings report. That drop in share price was a teddy bear compared to the grizzly bear that hit the entire market last week. We’re dealing with a new landscape tilled by the Coronavirus. Even our beloved broker, Robinhood, crashed unable to handle the volume caused by all the market turmoil.

So where does that leave my Ford-centric margin challenge? I am in maintenance mode for the moment. Not my ideal mode for stock held on margin. My intention was to move in and capture profit and to then close out and be ready for a new play. I hedged risk by trading in an established, dividend paying company. That hedging has payed off. I can generate income by selling covered calls and of course by collecting quarterly dividend payments. Still there is no room for being smug. I have to take responsibility for the fact that I am holding one hundred shares now priced well below what I paid for them.

Okay, let’s get into the details of the challenge.

Margin Challenge Status – March 5

100 shares of F at $8.98 per share for total of $898.11 on margin.

  • Minus $10.25 in interest. Accruing at $0.125 a day. (82 days in)
  • Plus $15.00 from Q1 2020 dividend.
  • Plus $35.00 from premiums for selling 5 covered calls since the start of the challenge.

$36.12 ahead in the challenge on March 6, 2020.

Currently $39.75 ahead in the challenge.

Final Thoughts

I am not shouting from the rooftops about these results. However, I do take pride in learning and growing as a trader and investor. In the past, I would have invested with a lot of hope and optimism, but without much of a strategy to address the volatility of the market. I have had my misses in this challenge, including choosing Ford to begin with given the long term downtrend of the share price. My mistakes are only problematic if I do not learn from them. I am here in the middle of this trade and I am owning my mistakes and my wins. The poor earnings and the Coronavirus market crash are gut punches, but I’m keeping my head up and continuing the fight.

Thanks for reading. I’ll continue to post on my margin challenge. Episode Four will be out next month or earlier if anything drastic or interesting happens.

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