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phil
April 17th, 2014 at 10:51 am

Short-Term Portfolio Review (STP):



DXD – We just adjusted those.  After subtracting the .38 we made off the short calls (.19 per 2x longs) we net $1.09 and, hopefully, we get a move in DXD over $1 and we can drop back to 30 with a substantially lower basis.  If DXD then moves even higher (Dow going lower) we can then take some off the table by reselling the $30 calls again for .50+ – that's how we work our basis down on a hedged position.  Also, don't forget, we paid for this whole thing by selling the 5 RIG puts!  

QQQ – Those are dead

TWTR – Almost dead.  That one is a leftover leg from a good trade.  

CAT – Long-term play I still like

USO – Right about where we entered but, if we are up 20% or more today, I'm inclined to take it and run into the weekend.  

XRT – We took 1/2 off at $3.50 but I still haven't seen enough good retail news to make me want to let go – I still think they can fail $80 and we're good for $5ish. 



CI – Long-Term Offset.  At some point, we'll move them to the LTP.

RIG – Long-Term Offset – Also needs to be moved to LTP later.  

SCO – Down a bit but that one I'm for keeping into next week, even if we do get a dip in oil today (but USO, we will cash). 

SLW – Silver is like a bucking bronco.  Since it's Jan and since the short $25 calls are now $1.58 and since I still have confidence – let's buy those back with a $1,600 profit and decide what to do with our long calls later.  

GMCR – Every time it moves up, I regret not buying back the short puts.  Keep that in mind next time they test $110 – maybe an earnings pop?

TSLA – Wow, $200 on the money today – nailed it with the short April $200 puts.  Still showing $1.65 at the moment and we'll put a stop at $2.50 (even), which is fine as our May puts are up huge.  Hopefully they expire worthless but around .50 I'll be thrilled to cash out.  This is a good example of a "Be the House" play, as we took great advantage of the fact that the April puts we sold drop their premium much faster than our May puts, which are protected by earnings uncertainty from losing too much of their own premium. 

FAS – Very tempting to sell covers again. In fact, let's sell 5 (1/2) may $90 calls for $2.80 – just in case we don't get another chance at this price – we shouldn't let a month go by without selling at least $1,000 in premium.  

SCO – Sadly, our April spread did not fare well.  The long $29 calls will expire worthless and we'll have to roll the short April $29 puts ($2.20) to 10 more May $27 puts ($1.05) and, since we already sold 10 May $27 puts for $1, it's effectively a 2x roll and our net is -0.80 we sold the April $29 puts for, plus the $2.20 we have to buy them back for, less $1 on the first 10 May $27 puts we sold and now -$1.05 on the second set.  That leaves us in 20 short May $27 puts at net ($2.20 – .80 – $1 – $1.05)/2 = 0.32 credit, so that's our break-even for May – so $26.68 is our break-even target.   Not so bad.  

As planned, our STP is down while the LTP is up.  Keep in mind the STP is 1/5th the size of the LTP, which is up $20,000 (4%), protected by what is currently a $1,300 loss in the STP.  In a choppy market like this, it's exactly the sort of performance we expect.  

In the Income Portfolio (also $500K), we went through the bother of closing everything down at the top and we have a 7% gain on that portfolio (see yesterday's review) for the quarter and we DON'T have to protect it at all because it's 95% cash at the moment.  The real benefit was that we didn't liquidate in a panic – we did it WHILE the market was topping in March.  

That's another advantage Fundamentalists have over TA people – we don't need to wait for a chart to tell us when it's time to get in or out of a position!