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Monday, August 15, 2022


Philstockworld November Portfolio Review

Image result for one million dollars animated gif$2,121,342! 

Not bad for the 4th Anniversary of our Primary Portfolios.  We began this lesson on November 26th of 2013 and allocated $500,000 to our Long-Term Portfolio and $100,000 to our Short-Term Portfolio with the intention of demonstrating our balanced, paired portfolio tactics over time.  Now, 4 years later, we're up $1,521,342 (253%), which is right at the top of our 40% annual compounded gains we can expect from this strategy when it goes very well.  

You can't double up in a year playing a hedged strategy like this because we're constantly betting against ourselves but by "Being the House – NOT the Gambler", we are able to CONSISTENTLY make 20-40% returns and, in this non-stop bull market – it's been more like 40%.  Well, a bit under 40% as $600,000 at 40% compounded for 3 years would be $2.3M but that's my fault, not the system's – as we got so close to goal back in October that I put the brakes on and shifted to a more neutral stance and, in our last review, we "only" made $14,565 for the month and, since last month, we've "only" made another $12,867 – it's like it's hardly worth getting up in the morning, right?  

Really, I am sorry I've been so cautious but I could not, in good conscience, risk those spectacular gains into Q3 earnings and the Holidays.  We have a lot of open positions and they'd be difficult to adjust quickly in a crash so I've been erroring on the side of caution but I promise to drink heavily over the holidays and come back all gung-ho bullish if this rally is still going in January.  

This too, is part of the lesson though.  Go over the last couple of reviews (archives here) and see how we went from very bullish in August, where we added $133,849 for the month, to lockdown mode in September and my reasons for being cautious were laid out in that review (9/29).  The S&P was at 2,519 at the time and, despite the "rally" – it's only just now testing 2,600 – two months later, so I don't regret missing out on a 3.2% rally.  If the rally is real – there will be plenty more to come and we know how to make money in a rally – we've certainly proved that over and over again in the past 4 years!  

What I am proudest of, in our Member Portfolios, is the low-touch nature of all 4 of our tracking portfolios.  Other than additions, we rarely change our positions other than at our monthly reviews, which considerably cuts down on trading stress and gives you your life back – something I've learned is just as valuable as making money now that I'm in my 50s!  

So, without further adieu, here are this month's updates:

Short-Term Portfolio Review (STP) – Submitted on 2017/11/14 at 12:46 pm:  $422,970 is up 323% but that's down 7.7% since our last review on 10/19.  That's mostly because I had forgotten an SCO trade we put in the OOP AND the STP and that's a big loser as oil moved badly against it and it was a November call.  Even with oil dropping another $1.25 this morning – not enough to save it.

Otherwise, the rest of the positions are doing their job but I do want to adjust our hedges.  Keep in mind, most of these adjustments are not urgent, make sure you get a good price above all else.  

FAS – Expensive leftovers from an old spread and it was much worse on recent bank earnings but I'm fairly sure they are toppy here and FAS tends to decay over time.  However, we need to buy more time so we'll roll them along to 40 of the short April $45 calls at $15.50, which will cost us about $4,000 but raises our strike by $8 ($24,000) so a good trade-off, though we're taking on a bit more risk going from 30 to 40 short, of course.  

  • ABX – On track. 
  • CHL – On track.
  • GOGO – On track 
  • SBUX – On track.
  • LABU – Suddenly, Biotech is out of favor again and that's great because we sold a full cover of the Dec 70 calls we though we'd be stuck with.  Since the spread was a net credit, all that has to do is expire worthless and we're good.  Let's put a stop on 5 of the short $70s at $5 – in case it bounces.  

SCO – My bad on this one.  I didn't know we had it in the STP so we didn't adjust it and now it's too late.  I still like SCO long but our timing was off but this is a new trade at this point.  We're stuck with the 25 short Nov $35 puts, now $6 and we will roll those along to 30 short April $30 puts at $4.70 ($14,100) about even.  Then we can take 50 of the April $27 ($4.70)/$35 ($2) bull call spreads for $2.70 ($13,500) and, if all goes well, we'll get back $40,000 less the $10,000 loss we're carrying through and the $13,500 of new spending is still a $16,500 profit – despite getting badly burned in the first round.  Fingers crossed and, of course I like this as a new trade – because it is a new trade!  

SQQQ – We got pretty aggressive and no pay-off yet.  March is still the most-likely timeframe for a sell-off but, realistically, the biggest sell-off we expect is 20% and probably just 10%, which will pop SQQQ 30% at most to $30 so we may as well roll roll the 60 short March $40 calls (last sale was 0.45 so ignore the ask price that's displayed) to 60 short June (yes, June) $30 calls at $2 ($12,000) so we'll recover some cash.  That will give us the $10,000 we need to roll the March $23 calls ($2.40) down to the March (not June) $21 calls ($3.20) and we're well-protected and SQQQ popping over $30 and paying us $90,000 is the least of our troubles re. the short June $30s.  

TZA – This one is profitable now as the RUT has been weak (and we kept pressing our bet, as we are now doing with SQQQ).  We'll probably have to roll the short Jan $20 puts but, otherwise, I'm fine with these targets and the 2019 $20 puts are $8, so we can roll 40 of the Jan $20 puts to 30 of the 2019 $20 puts when we're ready, so that's progress regardless.

All in all I'm happy with the hedges but we should get a bit more aggressive on short-term plays to put a little money in this portfolio.  Unfortunately, TSLA went lower today or that might have been fun but we'll find something in late earnings worth playing.

Remember, this portfolio exists to protect the LTP – the fact that we're up $322,000 is a happy accident along the way.  In a normal market (what's that?), the STP should be down when the LTP is up.  


Long-Term Portfolio Review (LTP) Part 1 – Submitted on 2017/11/17 at 11:41 am:  $1,698,372 is up $20,577 from last month's review and that makes sense because, unlike the OOP, the LTP is not self-hedging.  All the positions in the LTP are bullish (we would take bearish positions but long-term bearish hasn't been a good idea in the last 3 years, so we have none).  All the hedging is in the STP – always keep that in mind when looking at this portfolio.  

Our STP lost $7,700 so we're net $13,000(ish) and last month we were net $14,000 so very nicely locked down in our two largest portfolios.  Keep in mind, we did this in lieu of going to CASH!!! in October.  We wanted to see earnings and then get through the Holidays with our winnings intact – so this is all according to plan.  

The biggest concern we had was margin on our short puts and we cut our naked short put positions down to 12 (from a high of 36) and now we'll make sure we're comfortable with the coverage on the rest of our spreads.

  • ABX – I have to remember to move that call down to the rest of the group.
  • BRK.B – Berkshire is the S&P, actually it's the best of the S&P as Buffett has hand-picked the winners, either for his portfolio or as companies they buy in whole.  I wish they had gone down and we could have bought them but they didn't.  There's pretty much no way in hell these go in the money so silly to buy them back and, in fact, they are an easy way to raise cash even now.  
  • CAKE – Well these puts are all stocks I wish I could buy, I suppose.  We added CAKE on the dip and they blasted higher on earnings now.
  • DNKN – Comfort food theme here (Berkshire owns plenty as well).  Good for a new trade.
  • ESRX – I failed to update this entry because I forgot to bold and blue this entry.  As of last time (and no big changes so same move if you missed it) it was:  2020 is out so let's roll our 5 short 2019 $65 puts ($9.20) to 10 short 2020 $52.50 puts ($5.30) for a $750 credit.  We'll put the cash to good use and buy 20 2020 $57.50 calls for $10.50 ($21,000) and sell 20 of the $62.50 calls for $8 ($16,000) for net $5,000 – $1,400 – the $3,750 we collected originally puts us in this $10,000 spread for net $600.  Keep that in mind when I am THRILLED to spend $10,000 ($5/contract) to roll us down to the $47.50 calls (now $17) if ESRX goes lower because then we'd be in a $20,000 spread for $4,850 with a break-even 20% below the current price.

If you enter your positions correctly, you should WANT the stock to go lower so you can buy more at a lower price.  Make sure you read our article on scaling in in the strategy section – we are always going in with about 1/4 of what we intend to spend if the stock gets cheaper.  More often than not, the stock doesn't get cheaper and we just run out our small positions.  Once in a while, they go 20-40% lower and, assuming we still like them, we load up!  

In the above case, we took a very small 5 short put entry on ESRX to remind us to keep an eye on them and now they are cheaper so we are upping our buy commitment to 10 contracts (at a 20%lower strike than we started with) and we're adding a bull call spread at a price we couldn't get when we started (but HOPED we would). 

Even so, we're only 50% committed on this one so far.  Our worst-case is owning 1,000 shares at $52.50 which would take up $26,000 of our $3.4M in ordinary margin (0.76%).  If ESRX drops $20 (35%) and the short puts go to $25, our loss would be $25K – the same 0.76% of our portfolio so that, realistically, is the risk on the position.  As I said – a small commitment.  

  • FCEL – We REALLY do want to own them for net 0.97, so we can leave it.
  • GPRO – We got past earnings and they moved up so all good.   
  • SBUX – Very small and we'd LOVE to own SBUX for net $44.95 so we can stay with these.  
  • SEE – Even higher after earnings so all good.
  • THC – Back at the lows but I like them.  Good for a new trade.  
  • TLRD – In good shape, not worried. 
  • WATT – It's too good of a deal to sell (net $7.40).
  • WHR – That's a new one, no worries. 

  • CG – Sold off but recovering.  
  • F – Love them, not worried.  
  • GCI – Can you believe papers still exist?  Well, that was our logic, bet on the survivors in a declining field.   This one blasted up on earnings so I only wish we had more 

  • GE – NOW we think it's the bottom (waited last month).  Let's buy another 2,000 shares at $18.30 and buy back the 20 short 2019 $25 calls at 0.37 and sell 20 2020 $18 calls for $3.25 so the net cost of our new 2,000 is $15.42.  We have 20 short 2019 $28 puts at $9.80 ($19,600) and let's roll those to 25 short 2020 $25 puts at $7.35 ($18,375).  
  • GNC – Keep in mind here we are in for net $2.70 unless the stock is under $7.50 in which case we own 12,000 at a $5.10 avg but, either way, we're in the money at $6.45 and it's great for a new trade as the paper loss is gigantic – despite the fact that it's "on track".  
  • HOV – Another one where we aimed low and we will be called away at $1 with a ridiculous profit.  They are doing some strange financial stuff so I'm not keen to get back in.

Long-Term Portfolio Review (LTP) Part 2:  We have 42 spreads in this section.  I'd love to cut back but they are all so good!  

  • We made big adjustments in the OOP but here we're more balanced but I do want to get our 2019 $150 calls off the table, in case of a pullback so let's cash those for $31.20 ($156,000) and we will add 80 2020 $160 ($32)/$200 ($16) bull call spreads at $16 ($128,000).  We can then roll our 50 short 2019 $180 calls at $15.20 ($76,000) to 50 of the short April $170 calls at $11.50 ($57.500) and the 15 short 2019 $120 puts can be bought back for $2.55 ($3,825) and we can sell 10 of the 2020 $150 puts for $13.50 ($13,500).  I'd sell more but I'm expecting a pullback – but I'm not going to sell none!  So, now we've taken net $19,175 off the table, widened our spread and added 30 more (+60%) long units (though we are nearly fully covered) at a $10 wider spread – that's $80,000 more upside potential yet the same $160,000 potential at $180 that we just cashed out.   
  • AAXN – SEC investigation is making them cheap again ($23 now) but let's let them settle down before adjusting.  
  • ABX – Let's buy back the short 2019 $20 calls at 0.55 and see how it goes for a while.   
  • ALK – Had a silly sell-off so let's take advantage and add 10 more of the 2020 $65 calls at $12.90.  That puts us more bullish.
  • AMGN – On track.  
  • BBBY – Essentially a new trade with our recent adjustments, I like this set-up still.

  • BX – Well over our target and we'll let ourselves get called away and get back in if they ever pull back. 
  • CBI – Another one with low expectations that were exceeded.  Still good for a new trade as it's a net credit on the $15,000 spread but that's with the aggressive put sale (that I'm fine with).  
  • CHK – Making slow and steady progress and I have high hopes.  If they go over $5, then we're $30,000 in the money with no cap.   Still, as the 2020 $2 calls are only $2.30 and ours are $2.20 – I say we spend a dime and buy a year!  In fact, 100 of the 2020 $2 ($2.30)/$5 ($1) bull call spreads at $1.30 ($13,000) selling 50 of the 2020 $5 puts for $2 ($10,000) for net $3,000 on the $30,000 spread might end up being our 2018 Trade of the Year of CHK is still low next week.

  • CLF – Pulled back so we'll take advantage and buy back the 20 2019 $10 calls at $0.60 ($1,200) and we'll roll our 40 2019 $5 calls at $2.17 ($8,680) to 60 of the 2020 $5 ($2.40)/$12 (0.85) bull call spreads at net $1.55 ($9,300).  Hmmm, maybe that should be my Trade of the Year?  
  • CLNS – Too low to cover but not low enough to DD.
  • CM – We'll probably be called away in March but we can sell 5 June $85 puts for $3.40 ($1,700) so we can be re-assigned at net $81.60 or, more likely, just to get another $1,700 that offsets the 2 naked short calls.  
  • CMG – It finally calmed down and, on the whole, we're not so bad off so let's take advantage and buy back the 10 short 2019 $420 calls at $11 ($11,000) and roll our 10 2019 $280 calls at $52 ($52,000) to 20 of the 2020 $250 ($84)/350 ($42) bull call spreads at $42 ($84,000).  We can also roll our 10 short 2019 $350 puts at $78.50 ($78,500) to 15 of the 2020 $300 puts at $57.50 ($86,250).  That's net $35,250 and we've moved our strikes $30 lower and doubled down into a $200,000 spread (from $140,000) that pays off at $350 instead of $420.  Now we're in a great position to sell calls and, for example, we could sell 5 Jan $300 calls for $11 ($5,500).  Do that 10x and it's money but the main point is we can easily get our $32,250 back – so it's a great investment!  Maybe this should be our trade of the year?  

  • CSCO – Blasted higher on earnings, wish we had more.  
  • DBA – We're net even after more than a year but I still like them as an inflation hedge so let's roll our 30 2018 $17 calls at $2.85 ($8,550) to 40 of the 2020 $15 ($5.20)/$20 $1.85 bull call spreads at net $3.35 ($13,400) and we won't sell calls yet (the short Jan $23s should expire worthless).  The 30 short Jan $21 puts are $1.90 ($5,700) and we can roll them to 20 of the 2019 $20 puts at $1.50 ($3,000) as that's net $2,100 (we sold the $21s for $4,800) and we're fine with that.
  • DIN – Just starting to take off and this is one of those that I wish they had gone lower first so we could have bought more.  Well, we did buy the bull call spread on the dip – that's why we're up so much – because we followed our plan to scale in!  

  • DIS – As we expected, back over $100 and we're perfect on these.
  • FCX – I love this one, so cheap!  Again, our conservative spread is miles in the money.
  • FNF – Looks like we'll be called away on these.  Too high to repurchase or sell puts so we'll let them go.  I tried to buy this whole company for $2Bn in 2009 – couldn't get enough cash (even went to Buffett, Ackman, Pritzgers).  $10.8Bn now.  8(  
  • FNSR – We got more aggressive last month and now we're being punished.  May as well take advantage and roll our 20 2019 $23 calls at $3.10 ($6,300) to 40 of the 2020 $17 ($6.50)/25 ($3.80) bull call spreads at $2.70 ($10,800) and one day we will sell short calls too.  Not that we need to but we can also roll the 10 short 2019 $25 puts at $7.50 ($7,500) to 20 short 2020 $20 puts at $5.30 ($10,600).  That's net about $1,000 for our changes and we're in a $32,000 spread for net/net about $14,000.  

  • FTR – Can't not DD here.  Let's buy 6,000 more at $6.95 ($41,700) and sell 50 of the 2020 $8 calls for $1.10 ($5,500) so we're 1/2 covered with an average cost of $9.56 (and possibly assigned 4,000 more at $10 on the puts side).  If all goes well though, we'll collect $2.16 in dividends so, by the time we get to 2020, our net will be down to $7.40 and then we'll roll the short calls and all will be well (hopefully).  
  • GILD – The short Jan calls should go worthless but I'd rather wait for a bounce to sell more.  

Long-Term Portfolio Review (LTP) Part 3:  Into the home stretch now:

  • GM – Wow, I forgot we cashed out the stock looking for a pullback.  Didn't get much of one and it's reversing already.  I suppose we'll let it play out, we did take a bonus $28,050 off the table plus the $35,000 we intended to make means we've got $63,050 in our pocket against this spread.  At the moment, we can cash out for $27,125 – let's say we'll stop out at $33,000 to lock a $30K profit if it goes bad on us.  
  • GME – Still too cheap to sell puts.
  • HBI – Last time I was upset it took off before we could sell more and now they collapsed so – YAY!  Let's cash in our 10 2019 $18 calls at $3.20 ($3,200) and buy 40 of the 2020 $18 ($3.85)/$25 ($1.35) bull call spreads for $2.50 ($10,000) and let's roll our 10 short 2019 $20 puts at $2.90 ($2,900) to 15 short 2020 $23 puts at $5.55 ($8,325).  So that's net $1,375 out of pocket for 4x a wider spread!  Maybe this should be my Trade of the Year?  There's no need to roll the short 2019 $23 calls for now as they are very well-covered.  At some point, we'll 2x roll them to a shorter-term contract.
  • IBM – Pulled back but right at our target.  May as well take advantage of the dip to roll our 20 2019 $130 calls at $23.40 ($46,800) to 40 of the 2020 $140 ($19.70)/170 ($9.10) bull call spreads at $10.60 ($42,400) and we can sell 10 of the 2020 $140 puts for $15.50 ($15,500) so we're doubling our upside (but giving up $10 in strike, but we'll make it up with more short sales we can now do) and dropping to half-cover AND taking $19,900 off the table – BRILLIANT! 

  • IMAX – Junes are finally out but Justice League is getting bad reviews.  Still, no reason not to roll the 30 March $17 calls at $7.70 ($23,100) to 50 of the June $20 ($5.80)/26 ($2.30) bull call spreads at $2.50 ($12,500).  Once the short Dec calls expire, we can sell some more for income but this is $10,600 off the table and still a very nice upside on a huge credit spread.    . 
  • LB – Was going to be my Stock of the Year for 2018 but going up too fast now.   We have a good amount of these because they did take a dip that let us double down.  

  • M – $20 is a great floor and we're well-positioned. 
  • OIH – Doing well despite the low oil prices but off the highs.  I still like the trade and thank goodness we double-sold the short calls!  
  • PSO – Nice comeback on these guys despite (or because of) dropping their dividend from 0.42 to 0.065.  Unfortunately, the dividend is now too low for us to bother with so we can let this go when we're called away.
  • QCOM – Last month, I said "What a bargain down here.  I'm happy with our spread and it's not cheaper so we shouldn't buy more but I like it as a new trade as it pays $15,000 at $55 and just net $7,000 – even though the stock is already at $52."  Then this happened.  Fortunately, we were 1/2 covered so huge gains.  The $40/55 spread is net $14.80 so let's just cash those and be done with them, the short puts will go worthless – no sense in buying them back early (and if the sale goes through they terminate anyway).  


  • SKT – Let's roll our 20 March $22.50 calls at $3.20 ($6,400) to 40 of the 2020 $20 ($7)/30 ($3) bull call spreads at $4 ($16,000) and we can sell 20 of the 2020 $20 puts for $4 ($8,000) to help pay for it.  We expect the short March puts to expire worthless but we'll just take the hit if they don't so we're not too exposed.  
  • SPWR – This is a new one, already going well as earnings were good.  
  • SVU – We got aggressive last month and they are perking up a bit so wait and see now.

  • TEVA – Now the 2020s are out so we can roll our 30 2019 $17.50 calls at $1.95 ($5,850) to 40 of the 2020 $12.50 ($5)/20 ($2.50) bull call spread at $2.50 ($10,000) and we'll roll our 30 short 2019 $25 puts at $11.70 ($35,100) to 30 short 2019 $20 puts at $8 ($24,000).  As we initially collected $28,500 on the short puts, our net credit becomes $17,400 or $5.80 per contract so our break-even becomes $14.20.
  • TGT – On target.
  • TWTR – On track and another one we added to on the way down.
  • UNG – On track
  • WPM – This is the second round for our 2017 Trade of the Year and also going like gangbusters.  Right on track, plenty more to gain and the old Jan puts will expire worthless – love it!  

All in all it looks like we're in tremendous shape with plenty of big trade lined up to keep the money rolling in in 2018.  Meanwhile – it's time for the holidays so let's enjoy what we have (and give thanks!). 

Butterfly Portfolio Update – Submitted on 2017/11/14 at 2:01 pm: Slow and steady wins the race.   $384,183 (up 284.2%) is up another $9,109 (9.1%) in a choppy market and that's not bad for a month's not working.  Actually, we did add the T spread as a new one – so a little work.  This is hopefully one of those months where there's nothing to do (as most non-quarters are) and we can just let earnings season play out and see where we are in December.

I love this portfolio as it's so consistent and great for retirement accounts.  This is what "Being the House" is all about.  We just sell tons of premium and let nature take its course.  

  • AAPL – Despite being on track for a $180,000 pay-off from our $44,900 entry, we're only net $60,350 at the moment so barely budging but it's like a little piggy bank that pays off big once it's time to open it.  Not much to do but watch and wait for now but we're "on track" for a 200% gain from here so it's good for a new trade.  
  • COST – Glad we flipped bullish on this one.  Just because it's our goal to sell premium doesn't mean we ignore the channels and COST came back hard and fast in the past 30 days.  Earnings are around 12/7 and we can collect $3.75 for the short Jan $175 calls and we're well-covered so I say we sell 5 for $1,875 – just so no one can say we're not doing our job.  If COST goes up 10% ($190), we'll cash in our 2019 $160 calls (now $22.40) and pick up a 2x 2020 spread, like the $160 ($28.50)/$190 ($15) bull call spread at $13.50 so we'd spend a few bucks but have another year to sell short calls.  Good to plan ahead!  

  • CTSH – Didn't change at all on earnings so we'll just keep rolling the short calls along while we go further and further into the money.
  • DIS – It is time to adjust these as we just had earnings and our expiration time is short.  We'll sell the Jan $80 calls ($23 = $46,000) and we can let the short $90 puts expire and we can leave the 5 short Jan $100s so all we need to do is add a long spread.  Let's pick up 20 of the 2020 $90 ($21.50)/$110 ($10.50) bull call spreads at $11 ($22,000) and sell 10 of the 2020 $90 puts for $7 ($7,000) so we're pocketing $31,000 and we still have $40,000 worth of spreads to work with.

  • GIS – Another one we flipped bullish on that's paying off.  Earnings are mid-Dec but I'm not worried, let's see how they play out.  
  • IBM – Earnings disappointed a bit but that's good because we sold $3,750 worth of Jan $150 calls.  Remember, in the Butterfly Portfolio, it's not about picking winners but picking ranges around which we sell premium.  We're already in 2020 for the longs and this is on track so we'll just have to let it play out while the Jan premium expires.  

MSFT – The short Jan $70 calls are a bit of a problem but now we've had earnings so no new catalysts.  Since we are expecting a market pullback, we'll just await and see how this plays BUT, let's take the money and run on the 20 2019 $62.50 calls at $22 ($44,000) and we can trade that in for 30 of the 2020 $75 ($14.50)/$90 ($7.50) bull call spreads at $7 ($21,000) so that's $23,000 off the table and we're 50% over-covered on the short Jan $70s, which means we can do a 1.5x roll if we have to without worrying about our coverage.  

  • PG – That one was so obvious to play long I wish we'd have doubled down.  I'm not ready to sell calls just yet – I'm fairly sure we get back over $90 though $89 is close and I'm being a bit greedy.  The Jan $90 calls are $1.44 so let's say that, for $2, we can sell 5 for $1,000.  
  • T – This is our new one so we've already sold what we need to.  
  • TGT is a bit above our Jan $57.50 short calls but earnings are tomorrow so we'll see how things go.  I think higher but we're positioned for that with the partial cover in 2019.

  • TXN – So far, only the $100 line has even slowed them down.  We sold the Jan $85 calls for $10.45 and they are $11.65 in the money so our longs are well-protected at least.  I was banking on the rejection up here – now the question is how much of one will we get?  
  • VLO – Really enjoying the high gas prices.  We're over target on our short March $72.50 calls but, hey, March…

  • WMT – This is why I think TGT is way too low.  Our short Jan $77.50 calls are buried but earnings are Thurs and we'll just have to see what happens.  
  • WYNN – Another runaway stock and we're stuck with the short Jan $130 calls but at least we sold them for $16, so not too much damage.  I think we'll wait to see if they pull back with the market and, if not – RAWHIDE!  

Well, more work than I intended for an off month but 14 good positions poised to make us another $100,000+ over the next 12 months – nothing wrong with that!  

Options Opportunity Portfolio Review (OOP) – Submitted on 2017/11/16 at 1:42 pm:  $333,835 is up just $1,236 for the month, so clearly we were a bit too bearish but, on the other hand, we've done a fantastic job of locking our positions in neutral into the holidays.  We're up 233.8% in just over 2 years (we started on 08/08/15 with $100,000) – our primary mission here is to make sure we don't blow it!  

Now that we've gotten ourselves to neutral, however, it's a bit like a Jenga game and I hate to make a move for fear of upsetting the balance.  Also, since I don't know if we're topping out of breaking out – I'd rather not do much into the holiday weekend next week but we will be making a few necessary adjustments.

Fortunately, using our Be the House – NOT the Gambler strategy, time is firmly on our side and, as long as our position are "on-track" to our goals – then the premiums we sold WILL erode and more money will drop into our laps.  That's a nice, passive strategy to pursue and it works in almost any market – even this crazy one.  As I noted last month, I moved my kids' 529 College Funds to CASH!!! because, unlike this portfolio, I didn't have a good way to hedge them.  The OOP has 42% cash at $142,020 and our positions are well-hedged – let's keep them that way! 

  • NLY – Not worried, we'd love to own 1,000 shares for net $9.25.
  • WHR – New and good for a new trade.  There shouldn't be two of them though, have to delete one.  
  • TZA – Although we are $2.68 in the money, the net of the spread is less than $2 but it's a good hedge at net $15,240 with a $40,000 potential at $16, which is not that far away.  So, as a hedge, there's a $24,760 upside potential here.  I had originally called for selling April $18 calls for $1 but we couldn't get that price at the time, so we sold $16s instead.  I wish we did have the $18s. 
  • F – We're in for the dividends and on track.  Good for a new trade.
  • AAPL – Fortunately, we're only 1/3 covered but the Nov $145 calls we sold for $11.70 are now $26.35 ($52,700) so we'll roll them to 30 short Jan $155 calls at $18 ($54,000) for a small net credit and we'll roll our 60 2019 $140 calls at $38.50 ($231,000) to 70 of the 2020 $160 calls at $32 ($224,000) for another credit and we'll buy back our 20 short 2019 $130 puts at $4 ($8,000) and wait for a dip to sell 2020 puts but let's say the $140 puts are now $10 and the $150 puts are $13.50 so we'd like to sell 20 of the 2020 $140 puts for $14 or better.  So we're net a bit bearish here but we can roll the 2019 $170 calls ($20) to the 2020 $190 calls ($19.50) if AAPL pops $175 but I think it pulls back first and saves us some money.

  • AAXN – On track.
  • ABX – Can't pass up this opportunity.  Let's buy back the 20 2019 $20 calls at 0.55 ($1,100) and roll our 20 2019 $13 calls at $2.45 ($4,900) to 40 of the 2020 $13 calls at $3.20 ($12,800) and hopefully they pop back to $15+ where we can sell the $20 calls for $1.70+  (now $1.15).  If not, we'll sell lower covers and roll down.  The 10 short 2019 $15 puts at $2.37 ($2,370) and there's no point rolling them since the target is find.  
  • ATI – Great timing on the pullback so let's buy back those short Nov $20 calls ($1.80) and sell 10 2020 $17.50 puts for $2.75 ($2,750).  

  • CDE – We pressed ABX so no need to press them too.  We should go ahead and buy back the 2019 $10 calls (0.70) and roll our 15 2019 $5 calls at $2.70 ($5,400) to 25 of the 2020 $7 calls at $2 ($5,000).  That puts us in great position to sell calls when it spikes back up. 
  • CHK – Our long-term premise on Natural Gas is taking a long-time to play out.  Still, I do like them so good for a new trade.  
  • CLF – Got cheap again as Trump fumbled the ball on Tariffs and Infrastructure.  Maybe next year.  While it's low, we should roll the 2019 $4 calls ($2.75) to the 2020 $4 calls ($3) and I won't pay 0.60 to buy back the 2019 $10s but let's make it 30 of the 2020 $4 calls (10 more) and we'll see how it goes.  

  • CSCO – They blasted higher and we're all in the money now.  Net $4K on the spread that will pay $7K if CSCO holds up for 12 months.
  • DBA – Working for a change.  
  • FNSR – Was a small entry in June and now down at $20, where we wanted more.  Let's roll the 15 2019 $18 calls at $4.70 ($7,050) to 20 of the 2020 $15 calls at $7 ($14,000) and sell 10 of the 2020 $25 calls for $3.70 ($3,700) and we'll buy back the 10 short 2019 $30 calls at $1.25 ($1,250) so net $4,500 spent to buy a year with +$3 in strike and add 5 longs.  As we were about break-even before, the new position is net $4,500 + about $2K originally spent.  
  • FTR – This is a tough one as we're miles down but they are going to pay an 0.60 dividend on Dec $14th and that's 10% of the stock price so it's silly not to double down and buy 2,000 more shares for $6.73 ($13,460) and we'll sell 20 of the 2020 $5 calls for $1.90 ($3,800) so that plus the $1,200 we collect on this quarter's dividend means our 2,000 new shares are costing net $8,460 or $4.23/share.  That being the case, we may as well sell 20 of the 2020 $4 puts for $2 ($4,000) and roll the 20 short 2019 $10 puts ($6) to 40 short 2020 $4 puts (60 total).   That drops our net on the new 2,000 shares to $2.23 and we make 100% if called away at $5 and, if they keep paying a $2.40 annual dividend (doubt it) that would be like collecting 27% per quarter in dividends.  
  • GE – Another one that's too cheap not to take advantage of.  We can roll our 20 2019 $18 calls at $2.05 ($4,100) to 40 of the 2020 $15 calls at $4.75 ($19,000) and sell 20 of the 2020 $22 calls for $1.70 ($3,400) so it's net $11,500 to double down and drop $3 in strike and add a year.  We can also roll the 10 short 2019 $25 puts at $7.10 ($7,100) to 20 short 2020 $20 puts at $3.70 ($7,400) for a small credit. 

  • GOGO – Starting to come back.  Good for a new trade. 
  • IMAX – Hopefully Justice League will do well and then Star Wars – looking good for Q4.
  • JO – Another slow, frustrating trade but I still like it. 
  • LB – Nice bounce back today, hopefully they'll pop over $50 but, at $45, I will want to cover.

  • M – Good for a new trade.
  • MO – On track
  • SCO – I still like SCO long but our timing was off, so this is a new trade at this point.  We're stuck with the 10 short Nov $35 puts, now $5.70 ($5,700) and we will roll those along to 15 short April $30 puts at $4.60 ($6,900) for a $1,200 credit.  Then we can take 30 of the April $27 ($4.85)/$35 ($2.20) bull call spreads for $2.65 ($7,950) and, if all goes well, we'll get back $27,000 less the $6,950 loss we're carrying through and the net $6,750 of new spending is still a $13,300 profit – despite getting badly burned in the first round.  Fingers crossed and, of course I like this as a new trade – because it is a new trade!  
  • SPWR – On track.
  • SQQQ – Why are the short March $30s gaining while the long March $23s are dropping?  That's strange.   Anyway, let's roll our 50 March $23 calls at $2.10 ($10,500) to 60 June $20 ($4)/28 ($2.10) bull call spreads at $1.90 (11,400).  

  • SVU – Way too cheap down here but there are no 2020s so we're just going to double down on the 2019 $13 calls at $5 (20 more for $10,000) and wait for a bounce to sell some calls
  • SVXY – At leas the short put sales are working.  Let's buy back the short Dec $80 puts ($1.85) and wait for a dip to sell some more.  
  • TEVA – Another one that is stupidly cheap.  Let's roll our 10 2019 $15 calls at $2 ($2,000) to 20 of the 2020 $12.50 ($3.90)/$20 ($2) bull call spreads at net $1.90 ($3,800) and we'll roll our 10 short 2019 $25 puts at $12.60 ($12,600) to 20 short 2020 $15 puts at $5.10 ($10,200).

  • TGT – Sold off a bit on earnings but still on track for our spread, though it's red for now.  The reality is we paid net $2,440 for it and it's $6,000 in the money – the rest is just premium we're waiting to expire.  
  • TWTR – Been holding $20 most of the month.  Well over our targets so looking good to be called away in Jan.  
  • UNG – On track but we will have to roll those Jan puts next month.
  • WPM – On track.
  • WSM – On track and good for a new trade.  
  • XRT – On track and perking up.  Good for a new trade as it's net $2,900 and pays $5,000 at $42 in Jan for a quick $2,100 (72%) gain.  

So we put a bit more money to work and that's what our hedges are for – to protect our CASH!!! when it's out working on positions.  We're hitting record highs on the Nasdaq today, so it doesn't look like a great hedge but that's not the point, the point is to let time eat into all the premium we sold and, each month, we'll add a bit more to our CASH!!! pile.  



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Bravo Phil!

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