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White Christmas Portfolio Wrap-Up

Merry Christamas! 

I know it’s tacky to give cash but, as we closed our original, virtual $25,000 Portfolio early on October 20th and we were miles ahead of our $100,000 goal, we decided to do this bonus portfolio starting with a fresh virtual $15,000 set aside out of our $130,000 – risking 1/2 of the excess profits in an attempt to make 60% more ($10,000) in two months.  

We started that Monday, the 24th of October with our GNW spread (which I also discussed on TV that day) and that Friday we put up the official post where, I will remind you, our stated goal was to make a little bonus money for the holidays AND to share some of that money with a worthy cause.  I want to thank everyone who chose to donate to the NYC Food Bank, we got some really spectacular donations from some of you and I really appreciate it and I hope you have all gotten into the holiday spirit and helped to support those in need this season – it’s much appreciated and I thank you.

Just as importantly, I very much hope you were able to learn something following this portfolio.  We never put much capital at risk, we took quick profits off the table and we worked our way out of most of our losses through rolling and adjusting – letting the trading range do most of the hard work.  Most importantly, we had BALANCE – we selected trades in both directions – enjoying the wild ride from the up and down markets.  

That strategy, in fact, worked very well!  

As of Friday and since our last update on the 16th, when we had $41,465 of realized gains, we closed the following positions:  

  • 5 SCO Dec $37 puts sold for net $1.90, expired worthless – up $1,900
  • 5 FAS Dec $40 puts sold for $2.40, expired worthless – up $1,200
  • 10 TNA Dec $41 calls at net $1.50, out at $1.50 – even
  • 10 FAS Dec $61 calls sold at net $0 (spread), expired worthless – even  
  • 10 TLT 12/23 $121 calls sold for net .74 ($740), expired worthless – up $740
  • 10 GNW Dec $6 puts sold for .85, expired worthless – up $850
  • 10 QQQ 12/16 $56 puts at .57, out at $1.05 – up $480
  • 10 TNA Dec $40/41 bull call spreads at .40 ($400), out a .95  – up $550
  • 20 QQQ 12/16 $55 puts at .22, out at .22 – even
  • 5 JPM Dec $32 puts sold for .90, out at .15 – up $375
  • 10 TLT 12/23 $123 puts at net $2.87, out at $3.60 – up $730
  • 10 FAS Jan $67 calls at net $2, out at $2.80 – up $800
  • 10 FAS Jan 72 call sold at net $0, out at $1 – down $1,000
  • 10 GNW Jan $5/6 bull call spreads at net .49, out at .70 – up $210
  • 10 FCX Feb $33 puts sold for $1.25, out at $1.25 – even 

Up a very jolly $6,835 in week puts us miles over goal at $48,300, up a whopping 222% in 60 days!  That’s certainly enough to keep us ahead of inflation and triple our goal so Merry Christmas too all and I called it a good night (officially) for this portfolio on Wednesday but we’re all gamblers at heart so we did take a few bearish fliers into next week – just for fun:

Our remaining open positions are:
  • 20 DIA 12/31 $120 puts at net .85 ($1,700) 
  • 20 USO 12/30 $38 puts at .48 ($960) 
  • 5 VXX Jan $32/35 bull call spreads at $1.30 ($1,300)
  • 5 VXX 12/30 $34 puts sold at $1.12 (-$1,120)

Our goal is to not blow net $45,000 and we’re only risking $2,840 so, barring some huge bullish run that has us owning VXX short at $34 when it’s much lower – our $45,000 should be safe and maybe we get lucky and pull $50K – won’t that be fun?  

We’ll be starting a new virtual $25,000 Portfolio after the holidays and we’ll certainly follow the same strategy under the "if it ain’t broke, don’t fix it" rule.  Congratulations to all who played and  Please don’t forget, if following this bonus portfolio has been good to you this holiday season – please take a moment to do something good for someone else:

Reach more New Yorkers with a matching gift!

I know you may think $35 is not much money (we pay more in trading fees on single transactions) but, for some people – just having a hot meal makes for a Christmas Dinner.  I won’t bore you with anecdotes from the Food Bank nor will I deluge you with statistics but the valet parkers at my mall charge $10 so you don’t have to walk 100 yards from the parking lot and that same $10 buys a turkey at your local soup kitchen with which they can help feed a dozen people who are down on their luck a lovely meal.

The charity that is a trifle to us can be precious to others. - Homer

From all of us at PSW – thanks for another wonderful year!

Best wishes to you and yours this holiday season, 

- Phil

 


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  1. jomme

     Hi Phil and all Members
    First post  of mine as a member…. 
    Hi Phil
    Would like to wish to You and Your family an Excellent Christmas.
    To all Contributors and Members
    Would like to wish all of you  and your families an Excellent Christmas
    Thanks to all for the Guidance and the excellent discussions and topics.
    Have been following since a few months quietly in the background and learned  a lot. As well from a technical point of view as of a mental view  .. and I consider that last one the most important.
    Will slowly try be more active/participative  from the  new year on.
    Cheers

  2. zeroxzero

     Dear Phil:  Thank you very much for your Dec. 24, 6:35 PM rave in answer to one of my questions.  You have set in motion more than you know.  A corollary question:  what can usefully be done with TIPs, assuming that you’re right – which I take as a given, lest there be any doubt.  Buy some, certainly, but if I’m willing to look out a few years, there might be a better [read: more highly leveraged] way to approach it.  Answer at your leisure, please, and a continued Happy Holiday!!

  3. Phil

    WCP Moves

    • We got killed on the Friday $120 puts, down to .15 so no reason not to spend .08 ($160) to roll them up to the $121 puts (.23) and DD at .23 ($460) to put us in 40 at $2,320 (.58) as those $121 puts were $1.23 on Friday morning but our goal is just to get out even if we can.  
    • USO Friday $38 puts are .25 and no reason to take 2 chances so we’ll give it the day and hope to pull a little closer to our .48 entry.  
    • The VXX spread is Jan but we sold this week’s $34 puts so we just have to hope the VIX doesn’t stay below $22 but I’m pretty confident there will be more put buying into the weekend.  

     

    Submitted on 2011/12/28 at 9:03 am

     

    So I won’t be around until this afternoon but our goal is to get out of our WCP positions on a dip if we can.  We had a nice one in the futures but now we’re all pumped back up but that’s all the better to buy Disaster hedges with so here’s my 3 favorites:

    • EDZ Feb $19/24 bull call spread at $1.25, offset with the sale of the $17 puts at $1.50 for net .25 on the $5 spread.
    • SCO Feb $34/42 bull call spread at $3, selling $32 puts for $1.70 for net $1.30 on the $8 spread.
    • TZA April $26/38 bull call spread at $2, selling Jan $23 puts for $1 for net $1 on the $12 spread.  

    Alternate offsets (to make the trade less bearish and don’t forget, you can do half or less to mix it down!):

    • CHL 2013 $40 puts can be sold for $2
    • RIG May $30 puts can be sold for $1.20
    • BTU March $29 puts can be sold for $1.42
    • TM April $60 puts can be sold for $2
    • VLO March $19 puts can be sold for .90
    • JPM Feb $31 puts can be sold for $1.22

    That’s a good start for today.  If the Dollar is below 80 – no reason to hit the disaster hedges as confidence is better than I thought but watch TLT as over $120 means panic is still in the air.  

    750 on the RUT and 7,500 on the NYSE make excellent bull/bear indicators today and keep in mind that 1,266 on the S&P is the 2.5% line.  The markets have been so wild that our Big Chart has 5% lines in it but USUALLY we watch those 2.5% lines and consider them significant (in calmer markets).  Let that be the tiebreaker for the RUT and NYSE if they disagree. 

    I’m off to hit the slopes – have fun this morning!  

     

     

    So we’re all panicking about Europe again? Oh well, it was a nice week off and now back to reality I suppose…

    Oil $99.50 -Congrats to all the players there! Obviously, we are not pushing our luck and killing all remaining WCP positions.

     

     

     WCP/Neet – Well our goal was to cash out the Dow even and they hit $1 earlier and are back to .50 now but either way, it was never our intention to risk the money we threw in yesterday so happy to cash out even or better and walk away with the small USO loss. 

     



     

  4. Phil

    Thanks and welcome Jomme – good to have you on board and looking forward to chatting with you in 2012! 

    TIPS/ZZ – Not my expertise as I simply hate them as instruments.  I imagine, to some extent, they make a good short as they will never keep up with real inflation as they are based on the Government’s BS core inflation stats.  This doesn’t matter much when the difference is 1.5% to 2.5% actual but when TIPS are paying 3.5% to 6% actual, they will plunge in value I would think.  

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