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Friday, October 7, 2022

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$100K Hedged Virtual Portfolio Update

Well, there was no reason to adjust the virtual portfolio this weekend but now I'm a little concerned (as I went short-term bearish yesterday morning) and it's a good time to review our positions.

Monday gave us a lot if cushion but that doesn't mean we have to squander it.  Our last review was on the 25th and we had made adjustments on the 21st in member chat, triggering the plays we had decided to wait for the previous weekend.  Notice we haven't really had a down day since so there has been no reason to adjust what has essentially been a bullish set.   Yesterday, in comments, I called for covering our UNG play but that's the only move we've had to make in 2 weeks.  Sadly, vacation time is over so let's look over our positions and see where action will be required:

Our original positions were: 

  • 500 UYG at $3.48, selling 5 May $3 calls for .72 and 5 May $3 puts for .28, net $2.48/2.74

    • UYG now $3.91, May put and call combo now $1.05 = net $2.86 ($190 profit on $1,240 = 15.3%)

      • We are fine being called away on this position
  • Selling 2 FAS $7.50 puts for .45 naked

    • FAS closed at $9.40 so 100% profit of $90
  • 500 C at $3.04, selling May $3 puts and calls for $1.11, net $1.93/2.47

    • C now $3.31, We took out the callers for .30 on 4/21 and the May $3 puts are .20 = net $3.11 ($590 profit on $965 = 61.1%)

      • We should close this position, it is above our profit expectations
  • Selling 2 IYF May $36 puts for $2 naked

    • IYF closed at $41.80, May $36 puts $.35 ($330 profit on $400 =82%)

      • Because of the stress tests, I would rather close these out
  • 4/21 Sold 2 IYF May $34 puts for $2.10 naked

    • IYF closed at $41.80, May $34 puts $.20 ($380 profit on $420 =90%)

      • Because of the stress tests, I would rather close these out
  • Selling 2 JPM May $29 puts for $1.95 naked

    • JPM closed at $34.77, May $29 puts $.23 ($344 profit on $390 = 88%)

      • Because of the stress tests, I would rather close these out
  • 4/21 Sold 2 JPM $28 puts for $2 naked

    • JPM closed at $34.77, May $28 puts $.16 ($368 profit on $390 = 92%)

      • Because of the stress tests, I would rather close these out
  • Selling 7 FAZ May $10 puts for $2.40 naked (adjusted to reflect Monday’s gap down open)

    • Stopped out on 4/21 at $1.60 ($560 profit on $1,680 = 33.3%) 
  • 5 FAZ Oct $12.50 calls for $4 (adjusted), selling 5 May $21s for $1.05, net $2.95.

    • The Oct $12.50s are now $1.97, May $21s are now .05 so net $1.92 (a loss of $515 = 34%)

      • This is our protection.  Spending $1 to roll down to Oct $6 calls

We made fantastic gains on our mid-week adjustments.  If you are following this virtual portfolio – make sure you are signed up for Alerts (this one came Tuesday at 10:37).  Our upgraded system puts titles on the Alerts so future mailings should get your attention quickly when they are about the Sample Virtual Portfolio.  Alerts are included in the Premium Membership and Basic or Report Subscribers can sign up here:  https://www.philstockworld.com/membership/member.php

The trades we entered on 4/21 are as follows:

  • Selling 10 FAS May $6 puts at $1.20

    • FAS now $9.57, $6 puts now $.12 = net $1.08 ($1,080 profit on $1,200 =  90%)

      • Unlikely it goes back down but better safe than feeling really stupid so closing out
  • 200 GE at $11.28, selling June $10 puts and calls for $2.95, net $8.33/9.17

    • GE now $13.10 and the June $10s are $3.54, net $9.56 ($246 profit on $1,666 = 14.7%)
  • Selling 10 URE June $3 puts for .70 naked

    • Now .08 ($620 profit on $700 =  88%)

      • Again, better safe than sorry so off the table
  • 300 PGF at $10.23, selling May $10 puts and calls for $1.25, net $8.98/9.49

    • PGF is now $12.09 and the May $10s are $2.10, don't forget, this one is a dividend play.
    • ($303 profit on $2,694 = 11.2%)
  • 10 DBC 2011 $15 calls for $6.30, selling 5 May $20s for $1

    • The 2011 $15s are $7.25 and the May $20s are .85 ($1,025 profit on $5,800 = 17.6%)
  • 5 UNG Oct $8 calls for $6.20, sold 3 June $14s for $1.15 on 5/5 ($0 profti on $2,755)

    • Looking to add another Oct $8 call for $5.50 if possible

Overall we have a $5,611 profit since April 10th on less than $20,000 in deployed capital.  We have been very cautious about committing as we initiated the virtual portfolio as we expected this test of the market at the 40% line so it's a good time to get back to mainly cash and see how things play out.

We have our 7 FAZ calls covering our already hedged GE and PGF plays so we feel safe about them and now that we covered UNG we won't be so seasick watching them move up and down.  Keep in mind that this is a VERY dull virtual portfolio.  Our goal is to SAFELY manage $100K and we will be thrilled to make 20% for the year and we're already 25% of the way there – that is the point of hedging, you will not make spectacular money but you can make money in all kinds of market conditions!

 

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