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$25,000 Virtual Portfolio – Week 21 – Goaaaaaaaaaaaaaal!!!


We are over our $50,000 mark and right on schedule at the halfway mark!  Not bad considering we began with our aggressive $10,000 virtual portfolio last year, which we ran up to $36,630 – put that $11,630 back in the virtual bank and began this year in February with a $25,000 Virtual Portfolio.

The last major update to our virtual portfolio was back on May 21st.  We do send out Alert updates on a regular basis and discuss the trade ideas daily in Member Chat.  Now we can start July off with a clean $50,000 Virtual Portfolio with the same goal – to double up in 6 months but sticking to the same small allocation hit and run trade ideas that we used (mostly) in the first half.  I urge you to read the original post and the update if you haven’t already to get an idea of what we are trying to learn by following this "hyper-aggressive" virtual portfolio model.  

As promised, it has certainly been a wild ride and our last Alert Update from June 23rd left us off with $95,072 worth of closed transaction and a virtual net balance of $45,972, with about $49,000 worth of unrealized losses in our still-open positions.

Getting that close to goal with a week to go put us in shut-down mode and we didn't do too much trading last week but we did close the following transactions, which amounted to mainly closing out all of our losing trades for the year, charging them off against our $95,072 worth of winners that we already cashed out.  Our goal was to get those losses under $45,000, so that we'd be left with $50,000 cash:  

  • 40 FAS July 1st $23 calls sold for .95, out at .70 – up $1,000
  • 20 FAS June 24th $25 calls sold for .27, expired worthless – up $540
  • 20 FAS June 24th $24 calls sold for .70, expired worthless – up $1,400
  • 100 QQQ June 24th $55 calls at .04 – expired worthless – down $400
  • 10 QLD July $77/81 bull call spread at $2.40, out at $3.85 – up $1,450
  • 20 USO July 1st $38 puts at .75, sold for .90 – up $300
  • 10 COF July $52.50 calls at .95, out at $1.05 –  up $100
  • 20 FAS July 1st $27 puts at .60, out at .50 – down $200
  • 20 EGLE Sept $3 calls at net .65, out at .10 – down $1,100
  • 20 EGLE June $2.50 calls sold for .30, expired worthless – up $600
  • 40 HOV Aug $2.50 calls at net .80, out at .25 – down $2,200
  • 20 C July $46 calls at .66, out at .14, down $1,040
  • 20 GMCR July $70 puts at net $3.50, no point cashing out – down $7,000
  • 4 CCL July $42 calls at $2.15, no point cashing out – down $860
  • 4 AMZN July $215 calls at $5.25, out at $1.75 – down $1,400
  • 80 FAS Aug $23 calls at net $7.24, out at $3.20 – down $32,320 

As usual, FAS is our little cash machine, making us $2,940 in sales on the week but this time we are taking  our loss of $32,320 off the table as we finally close out the trade. The FAS Aug $23s actually finished the day at $4.20, so we left $8,000 on the table but our goal was to get to $50,000 and it wasn't worth the risk of "going for it" once we hit our target – EVEN in a very aggressive virtual portfolio.  

In our last virtual portfolio update, I had said about the FAS trade: "At the moment we are naked (not much to lose at this point) and one day, maybe, we will get a win when FAS pops and we are uncovered."  Well, FINALLY, this was that day!  

Had FAS not popped, we would not have hit goal and we would not have cashed out and we would have continued to work our losers by selling more calls and generating an income, using the cash to roll to better positions until the market turned back up because – THAT'S THE WHOLE STRATEGY.  The real trick is, WHEN the market finally turns up, you have to learn to take it off the table.        

We closed out net negative $41,130 worth of positions this week, leaving us with nothing but $53,942 in virtual cash!  So we take that $3,942, along with the extra $11,630 from last year's $10,000 Virtual Portfolio and we invest that CONSERVATIVELY because $15,572 is up 55% in 18 months on the original $10,000 is a very nice return to lock in and that means we can have fun gambling with the profits! 

Speaking of Conservative – I'll do an update of the Income Virtual Portfolio this weekend as well as we shut down our short puts there as well.  Boy will I be embarrassed if we don't get a pullback!  

They say "better safe than sorry" but being sorry really sucks!  

Have a great holiday,

- Phil


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  1. I was late to the party on the $25KP and it worked out great for me.  We got out of FAS for more than I paid for it and I made money on those call sales too.  Will we still be doing that in the new portfolio or just the FAS money trades from now on?  

  2. Hello again, PSW et al !   
    It’s been a while, but I’m glad to be back.
    Looking forward to a profitable H2 2011. 

  3. Phil, I have idea for income trade. What is risk and what we can use for hedging this type trade? Buy PFE jan2013 20 straddle 4,75 and sell aug 21C and 20P for 0.8 (16,8% 1,5 month) Thanks!

  4. Good evening!

    I hope everyone is having a nice holiday weekend!

    Futures pretty calm at the moment, dollar 74.48, oil $95.26 – no major excitement.   Nikkei flirting with 10K, probably a good line for going short off (or long if that fails).  80.83 Yen to the Dollar at the moment.   Gasoline (/RB) is a nice but risky short at $2.975.  I’d go with a tight stop at $2.98 and then back in if we break below or at $3 with that stop line but I super-doubt the holiday driving numbers will be good.  Barron’s did a big piece boosting oil this weekend and it’s not really doing much for it – seems like a very obvious pump job:

    Following a brief lull this summer, crude prices will rise rapidly to a plateau of $150-170/barrel by spring 2012 as spare capacity dwindles to "untenable levels," Barron’s says. Commercial hedgers, currently uber-bearish, are dead wrong – offering a "great buying opportunity" for petroleum bulls.

    Here’s a quick lesson in article reading – CHECK THE AUTHOR!!!  Gene Epstein wrote Making Money in Commodities as well as Econospinning, which is a critique of the "Liberal Media".  He’s also a proponent of the gold standard so, in short – this is just another guy talking his book.  In case you wonder why I sometimes ignore "news" items – it’s because I sometimes don’t trust the source and I prefer to TRY to keep things real during trading hours – although sometimes the rumors are important too (as usual, I have to go with my gut a lot).   

    FAS/Bruce – Congrats on the timing!  Yes, we will be doing another play like that BECAUSE it makes money.  I will just try to avoid it becoming such a major part of the portfolio.  

    Welcome back Strat!  

    PFE/Pahur – Well, you have 565 days to sell and you’re using 47 of them on your first sale.  Don’t forget you are burning almost 10% of your time value on the straddle so there’s .47 out the window regardless of whether you have a winner or not on the short strangle.  If you get blown out one way or another by (very possible on earnings months) then it would take you 3 perfect sales to catch up – not my favorite kind of play.  On the FAS Money, we’re selling A LOT more premium – it’s a big difference.  

    If you want to make money with PFE, you can buy the 2013 $15/20 bull call spread at $2.65 and the $25 calls for .60 for net $3.15 on the $5 spread and then you can sell the Aug $21 calls for .42 (13% of your outlay) because you make $1.85 if PFE just stays above $20 so that’s a nice buffer and you have plenty of time to roll and, once you get over $25, the 2013 $25 calls kick in and you already have the $1.85 profit from the cover.  

    If PFE goes the other way and sells off – THEN we would like selling puts or maybe buying the stock.  

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  6. CSCO
    A few months ago Phil put up a CSCO Jan’13 artificial BW, buy 4 15.0 Calls, sell 4 17.5 Calls, and sell 4 17.5 Puts.
    Now, the 15.0 Calls used for the artificial buy have over 1.50 premium.  I plan to roll the 15.0 Calls to the 10.0 Calls for a 3.50 debit to "Sell" the premium.
    This will generate an additional 600 profit if CSCO makes it to 17.50 by Jan’13, and lowers the breakeven from 16.0 to 15.25