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$100,000 Virtual Portfolio Update – Week 5

Well this has been annoying

After 30 days of trading our current virtual portfolio value is just $100,454.39 as we took quite a setback when we sold naked calls ahead of the move up.  Fortunately, we didn't lose our cool and rode it out.  In fact, we only made one trade in the past two weeks so there hasn't been much to report and there still isn't but the end of our first month is a good time for an update.  Of course, we do have a lot of outstanding October Premium to collect so the next two weeks are when we make our real money

We still have $92,315 in cash so plenty of buying power should we choose to deploy it but we are sticking with our plan of scaling into the postions we have, which means we're letting them run out through October 16th expirations and we'll see if we finally get the bargains we've been waiting for to set up our longer term bull plays.  For now, in this VERY conservative, low-touch virtual portfolio, we've been following Warren Buffett's Investing Rule #1:  Don't lose money!

Description Price Paid Last Price Qty Market Value Margin Req. Profit Loss %
AIG CALL 40 Oct 09 $6.30 $5.50 -1 $550.00 $1,196.20 $80.00 12.70%
On target with AIG at $43.40, this is typical of our outstanding sales with the VIX so high – we just have to wait.
AMZN CALL 90 Oct 09 $3.60 $2.80 -10 $2,800.00 $16,127.50 $800.00 22.22%
We wouldn't do this play if we needed the margin but a nice $2,800 to collect if AMZN stays below $90
BAC CALL 10 Jan 11 $8.60 $7.50 5 $3,750.00 $0.00 -$550.00 -12.79%
BAC CALL 17 Oct 09 $1.27 $0.43 -5 $215.00 $1,110.50 $420.00 66.14%
BAC PUT 17 Oct 09 $0.97 $1.09 -5 $545.00 $1,770.50 -$60.00 -12.37%
BAC PUT 20 Jan 11 $5.45 $6.30 5 $3,150.00 $0.00 $425.00 15.60%
Drifting right around our $17 target is perfect.  If they get cheaper, we buy more!
C CALL 4 Mar 10 $1.30 $1.09 10 $1,090.00 $0.00 -$210.00 -16.15%
C PUT 4 Dec 09 $0.46 $0.32 -10 $320.00 $720.00 $140.00 30.43%
C PUT 5 Oct 09 $0.52 $0.57 -5 $285.00 $624.00 -$25.00 -9.62%
We DO want to own C long-term so no big deal but needs to be watched closely if they head lower still.
CROX CALL 4 Mar 10 $3.70 $2.99 5 $1,495.00 $0.00 -$355.00 -19.19%
CROX CALL 7 Oct 09 $0.50 $0.13 -5 $65.00 $112.75 $185.00 74.00%
CROX PUT 7 Oct 09 $0.90 $0.80 -5 $400.00 $862.75 $50.00 11.11%
A bit low – shame we never filled the long put or this would be perfect (same with C)

 

Description  Price Paid Last Price Qty Market Value Margin Req. Profit Loss %
GE CALL 16 Oct 09 $1.29 $0.34 -20 $680.00 $4,008.00 $1,900.00 73.64%
GE PUT 16 Oct 09 $0.88 $0.99 -10 $990.00 $3,294.00 -$110.00 -12.50%
We need a .50 stop on the $16 calls and for .10 we buy them out this week.  We're fine with GE put to us net $15.12.
LZB – Stock $9.21 $7.97 500 $3,985.00 $0.00 -$620.00 -13.46%
LZB  CALL 7.5  Jan 10 $2.70 $1.40 -5 $700.00 $0.00 $650.00 48.15%
LZB PUT 7.5 Jan 10 $1.15 $1.10 -5 $550.00 $925.00 $25.00 4.35%
Right on target to get called away so no change.
MHP PUT 25 Oct 09 $0.80 $1.25 -5 $625.00 $2,471.50 -$225.00 -56.25%
We actually want this stock so not worried at all.
PSQ CALL 50 Jan 10 $3.05 $2.50 10 $2,500.00 $0.00 -$545.00 -17.90%
These are doing their job as long-term protection so far, no change
TWM PUT 28 Oct 09 $2.00 $0.50 -5 $250.00 $1,650.00 $750.00 75.00%
Stop on these at .75 as the are redundant to the PSQs and well ahead.  Buy out for .20 if possible.
UYG CALL 4 Jan 11 $2.45 $2.25 10 $2,250.00 $0.00 -$200.00 -8.16%
UYG CALL 5 Oct 09 $0.95 $0.55 -10 $550.00 $1,364.50 $400.00 42.11%
UYG PUT 4 Jan 11 $0.70 $0.75 10 $750.00 $0.00 $50.00 7.14%
UYG PUT 5 Oct 09 $0.25 $0.15 -10 $150.00 $650.00 $100.00 40.00%
A bit below target but we have our XLF calls below to protect us so no worries
XLF CALL 14 Oct 09 $1.36 $0.59 -20 $1,180.00 $5,467.00 $1,540.00 56.62%
We'll have to stop these out at .70, even though I generally think they're heading lower, we're up to much to blow it!

 

If we get a good sell-off next week, I'm likely to want to add some put sales, especially in tech stocks where we're well protected by our PSQs and underinvested (because we've been waiting for a good price).  Off hand, I'd say we should probably sell some RIMM puts like the current $65 puts for $1.95 as 5 of those would put $1,000 in our pockets and we can roll them to the Nov $60 puts (now $2) if they head south.

So something like that next week but we're still expecting a bit more of a move down and our overall position here is fairly bearish so selling puts, which is bullish, is something we'll only do if we see the markets finding a proper floor.

We're still waiting for Wall Street Survivor to finish the big overhaul on their order system so we can order spreads (which is also critical to rolling).  Once that's in place, we're going to start a more active and more aggressive $100K Virtual Portfolio.  The new system will have alerts to allow you to follow along live so members who wish to follow need to make sure they are signed up HERE

 


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  1. AAPL……… brainstormtech.blogs.fortune.cnn.com/2009/10/03/apple-analysts-scramble-to-catch-up/  Just an update on my favorite stock.


  2. A lot of you are already aware of this, but I was a TOS user for quite a while before I discovered the feature I’m going to discuss regarding beta weighted portfolio analysis – perfect for examining the $100KP.
     
    TOS provides an ability, which most of you using TOS have probably used, under the Analyze tab, to view the ‘Risk Profile’ for each position you own, or are thinking about owning via the ‘Analyze Trade’ item.   This is useful to me to be able to look at each of my individual positions within the $100KP, as I strive to make sure I understand why I’m in a particular trade, as well as understanding the risk/profit for that position.
     
    While that’s great for each individual position, one day I found myself wishing I could view a ‘Risk Profile’ that would be a summation for all of my positions.  While thinking about it, I thought, well, that can’t work, because each of those positions has it’s own delta and volatility , so I would be comparing apples to oranges.  After a little more thinking, I realized I might be able to simulate this by using Beta, which in simple terms shows the reaction of a stock to some other stock or index like the S&P500.
     
    Up until this point in using TOS, I had noticed a ‘portfolio, beta weighting’, but couldn’t understand what it could be trying to represent.  With the insight I had gained from my own desires, I realized this may very well be the exact thing I was wanting to do – have a way to pull all of my positions into a single ‘portfolio view’, and use the Beta value to simulate the over all market position.  TOS even give me the ability to determine which stock, or index I want to use as the element to compare against.  
     
    So now, if I want to see what the overall positions in my $100KP represent, I go to the Analyze tab, then ‘Risk Profile’  and make sure I only have stocks selected that are in that portfolio (I have some other items in this account).  Since I’m interested in trying to get a feel for how the overall risk/profit will react based upon the movement of the S&P500, I enter in the SPX for the symbol, and then change the ‘single symbol’ selection to be ‘ Portfolio, Beta Weighted’….and Bingo – I can view my overall risk profile for the entire $100KP with respect to movements on the SPX!
     
    From this, I can see that Phil’s suggestions have provided us, from the perspective of movements on the SPX, with a fairly wide base break-even before it moves into a loss, either left or right.  While what I see on my output is different then what you would see, because I have some positions that didn’t trade, as well as some extra positions, my total portfolio, most of which is within the $100KP, currently is showing, at Oct expiration, that I’m dead-center in the max-profit zone, with break-evens at the limits for a single standard deviation move between now and Oct.  With the expiration graph, it looks like Phil’s suggestions have placed me into as good of an aggregate position as I could have hoped to be in.


  3. Phil – struggling a bit with this statement from above – appears to be a mistake – per that entry, no calls were sold.  Tried to confirm on WSS, but it appears to be down at the moment.
     
    From your statement above:

    C CALL 4 Mar 10
    $1.30
    $1.09
    10
    $1,090.00
    $0.00
    -$210.00
    -16.15%

    C PUT 4 Dec 09
    $0.46
    $0.32
    -10
    $320.00
    $720.00
    $140.00
    30.43%

    C PUT 5 Oct 09
    $0.52
    $0.57
    -5
    $285.00
    $624.00
    -$25.00
    -9.62%

    Very smart to sell more calls than puts!  We do want to sell 5 more puts for $1+ if we get a drop.


  4. AAPL/Iflan – I want to meet the guy with a $90 target and find out what he’s thinking…

    Beta/Java – Thanks, that’s good to know.  Now we just need the market to cooperate!  8-)

    C/Java – Oops, you are right!  I forgot the Dec was a put roll.  That’s a case of something I meant to do but I think we never hit our sale price….  Fixing it now.