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Philstockworld July Portfolio Review – Members Only

Image result for one million dollars animated gifRather than writing about news the market is ignoring, I thought I'd get started on our Portfolio Review.

I tried this last month and never finished it (finished in chat) but, seriously, I am trying not to be doom and gloomy so I'm going to ignore the news and focus on our nice Member Portfolios and this should be quick because we did the Long-Term Portfolio (LTP) Review on Wednesday morning (only 2 changes) and the Short-Term Portfolio (STP) Review on Tuesday (no changes) and the reason there is nothing to change is because we are super well-balanced, as we should be in a time of uncerainty.  

How well-balanced.  Well the STP was at $405,464 on Tuesday and the LTP was $901,428 on Wednesday for a combined $1,307,074 in our primary paired portfolios and, as of yesterday's close, we're at $928,128 and $381,501 for a combined $1,309,629 – that's pretty well-balanced!

There are two ways to play uncerainty and one is to go to CASH!!! and we topped out at right about $1.4M (up 133% for the year) in the LTP/STP and I said at the time that we should put a stop at $1.2M to preserve a double but then we had some craziness with TSLA so we rode that out and hopefully it will calm down and start making some money.  In any case, we didn't cash out, we decided to hold our positions and being well-hedged is like cashing out as we're not likely to make a lot but, if we're quick, we have a better chance of catching a nice move than if we were just sitting on sidelined cash. 

If we were not locked in our homes with nothing to do – I would have cashed out and been on a nice 3-week cruise at the moment – that is the more sensible thing to do.  The advantage of either CASH!!! or balance in an uncertain market is that, if the market goes lower and you hold your value – then you have a lot of money to buy stocks when they are actually cheap – just like we did in March – which is why we are up so much now.  We'd hate to miss another opportunity to double up, right?

We also did a quick portfolio review in the weekly webinar but I'll print them out here for additional reflection this morning:

Butterfly Portfolio Review:  One thing you have to get used to in the Butterfly Portfolio is balance fluctuations.  We didn't change much since ourt last review but AAPL, AMZN and WHR all slammed us by popping higher than expected.  This portfolio is one we run for the long-haul under the "slow and steady wins the race" philosophy.  We're up 46.3% but $292,586 is down $102,648 from our June 19th high.  As you'll see, it's nothing to panic about and this is a good time to start this portfolio as we can make a quick $100,000 from here (33%) if things normalize.

  • AAPL – We got more conservative but AAPL did not.  The Aug $330s are $60 and they can be rolled to the Oct $350s at $50 so we're paying $10,000 for $20,000 more strike.  Since our $200/260 spread is now net $144,000 out of a potential $180,000, it has $36,000 more to gain to cover the short calls.  Still, we can do much better than that in two years so we'll cash that spread ($144,000) and move to 40 of the June 2022 $300 ($117)/400 ($65) bull call spreads at $52 ($208,000) so we're spending $64,000 to move from a spred with $36,000 potential to one with $192,000 potential – easily covering the short calls but also well-covered by them. 

  • AMZN – Another one where we have a big loss on the short calls.  The $1,700/2,000 bull call spread has $180,000 potential and is currently net $141,150 so $38,850 upside potential and they are way out in 2022 and we think AMZN is priced a bit high (unlike AAPL) so here we're more inclined to roll the 4 short Sept $2,600 calls at $482 ($192,800) to 5 short Jan $3,000 short calls at $365 ($182,500) and we will buy back the short 2022 $1,000 puts as they are pointless and sell 2 of the Jan $2,400 puts for $120 ($24,000) to balance it just a bit.  

  • DIS – At $119 the short calls will expire at $4 ($6,000) and the short puts will be worthless so we are up $1,250 in two months on those sales and now we can target selling 15 of the Sept $115 calls for $10 ($15,000) and 10 of the Sept $110 puts for $3.75 ($3,750).  Yes, it's a bit bearish because Florida is a disaster and if Disney re-closes, it's very likely to take a hit and certainly the movies aren't opening back up soon.

  • F – Brand new play for us.  Good timing too!  This is a $15,000 spread we paid net $4,700 for.  All we have to do is manage our short calls and all will be well above $7.

  • KO – A little off target but we're paying back net $665 against net $1,725 sold so we're making over $1,000 in two months on a net $1,800 position!  You can see why we structured our new Hedge Fund to follow this strategy for income-production!  Next we will sell 5 Sept $47 puts ($2.70) and calls ($1.65) for $2,175 and hopefully we keep another $1,000.  

  • MDLZ – Another nice, flat chart which makes us very happy.  The short July calls are on target but not much profit, hopefully the put side will do better.  I suppose we can sell 15 Sept $52.50 calls for $2.50 ($3,750) to be safe – in case the economy pulls back.

  • MJ – We like this one because there's so much premium to sell.  We lost this round but that's because we didn't sell puts but now I feel better about it so we'll sell 20 Sept $14 calls for $1 ($2,000) and 20 Sept $13 puts for $1 ($2,000) and that's $4,000 collected on the net $6,150 credit spread – so I'd say we're doing nicely!  

  • WHR – We did not expect WHR to recover so fast but it's easy to fix.  Obviously the short $160s expired worthless so we made $4,250 on those and our $45,000 spread is deep in the money so that's looking good and we are in the position with an $1,850 credit so it's all gravy from here and the position is only net $19,850 so we're good to more than double PLUS we'll make money selling short puts and calls.  For now, we'll roll the 5 short Sept $120 calls at $27.50 ($13,750) to 7 short Jan $140 calls at $20 ($14,000) so pretty even on the roll as we think it's toppy here and we'll see how earnings go.  

Dividend Portfolio Review:  Down 10.1% is not great but we're not in these stocks for the returns, we're in them for the dividends and it's nice to make some money, but that's more of a bonus, overall.  We're only 6 months into our first 18-month cycle so I'm not worried and we already survived a huge downturn.

  • PFE – Well I'm sorry we didn't buy that stock.  Still, it's a free $5,500 we're being paid NOT to buy PFE for net $22.50 (I'd rather have the stock).  
  • CHL – Just paid us $1.11 ($555), which is 3.3% of our $16,600 net entry, which is a very nice quartely income and the spread looks like a loser but it's really not as our net entry is only $33.20 and we get called away at $35 or, below $37.50 we DD to average $35.35, which is about the current price.  Of course we'll roll the puts and calls next month to collect more money.  I love options!
  • ET – There were so dead and now back on track.  Only net $4,760 (original) is $2.38/share and the shares are now $6.56 so I think we'll be OK – you have to learn to ignore the portfolio balances on these kinds of spreads and focus on the fact that, at $5, we get called away for $10,000 and, of course, we have the aggressive put but we're on track and it's so profitable now that we could kill it and go riskless – but what fun is that?

  • MO – Just paid us 0.84 ($420) which is 2.4% of our net $17,250 entry – this is much better than keeping money in the bank, isn't it?  Not to mention the tax break.  This one is underperforming but we have 2 years to get back and such low puts there's nothing to worry about.
  • SPG – Just paid us $1.30 ($650) which is 4.9% of our $13,250 net entry for the quarter.  That's just $26.50/share and we're at $62 with a call-away at $65 so I think we'll come out well here.  Why?  Because we bought it while the short puts and calls were jacked up from the volatility and we weren't greedy.  

  • TWO – Just paid us 0.14 ($140) which is 6.5% of our $2,150 investment.  That makes our net share price $2.15 and we're at $5.24 so this one will be way more profitable than it looks on paper – still net $2,820 out of $5,000 potential in December – good for a new trade if you don't mind just making $2,180 (77%) plus the dividends in 5 months.

  • F – We just put them in the Butterfly Portfolio.  F is not paying a dividend but we're in for net $10,170 and we get called away for $17,000 if all goes well and we played htis one super-conservative, tripling down to reduce our basis and then selling 20 of the $5 calls but that was the smart play back in March's uncertainly and +$6,830 (67%) is nothing to sneeze at, right – especially after we had such a bad initial entry.

This is what scaling in is all about.  We liked Ford but they suspended the dividend and took a dive as all those investors bailed and, though we were dividend investors here, we are also value investors so, rather than ditch them out of dividend principle, we tripled down out of value principle.  Because we scaled in and had a small initial position, we were able to easily take advantage of the downturn.  

M – Not bankrupt is a win here.  We got caught with the short puts so this one hurts and we'll have to see how earnings go.  Our call-away at $5 is $10,000 and we're in for net $6,400 so a $4,600 profit but then we would be re-assigned 4,000 at an average of $10.50 so that's what we really need to break even on this one.  That means we HAVE to adjust this trade if we intend to stick with it as $10.50 is up 50% so too far away to count on.

  • SIG – Another no more dividend stock (for now).  Also stuck in the malls but also a great value.  We're just waiting for the price to improve so we can sell calls and maybe short calls for income.
  • SKT – Bang, bang, bang!!!  I really think people are missing out on them.  Earnings are 8/5 so we'll see how badly the virus hit them.
  • T – Just paid us 0.52 ($520) which is 2% of $26,650 but we know we'll be owning these forever.

Earnings Portfolio Review:  $184,214 down about $5,000 from our 6/19 review and that's perfect because it's self-hedging and we wanted to be neutral – and that's what neutral is.  When you are up 85% in 6 months it's more important to protect your gains than trying to make more money in an uncertain market. 

  • ACB – Making a comeback but off the highs ($20) by a lot so we''ll see how earnings go.  
  • HBI – Right on track but not much net gain.  It's a $10,000 spread at net $1,350 so great for a new trade.  
  • HRB – We knew the long calls would go worthless and we only hope the short puts will maek up for most of it down the road.
  • IRBT – This was my Stock of the Century but we got mad at them when they dumped their military division and we switched to LMT (but for the fusion, not the military). Still, these guys are knocking it out of the park and we're even on track with our short calls.  

  • M – This one is making money because our timing was better.
  • SQQQ – Our hedge is not hurting us because we hedged the hedge but let's buy back the short Jan $35 calls only because they are pointless and we leave the slot open for another sale down the road.

 

 

 

IN PROGRESS

 

 

 


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  1. Good Morning. 


  2. Good Morning


  3. Good morning!

    Gasoline taking a dive now that the holiday excitement is gone.  We saw that coming:

    Oil (/CL) back to $41 and I'll short that using tight stops above:

    /NG with a nice bounce off $1.70

    3,200 has been tough on /ES, we'll see if it holds into the weekend.

    Everyone is toppy here.


  4. good morning


  5. hi Phil, thanks for the brkb suggestion couple of days ago. my cost base is very low becos i had some for 23 years! you suggested selling jan 2022 puts and calls at 150 strike. would you change that given my low cost base?


  6. i've also been trying to get into the F trade but somehow not getting filled. i don't want to overpay, any suggestions? thanks 


  7. Happy Friday everybody. All out of WY from back in March, but it looks like buying lumber futures /LBS would've been an even better play. Holy cow… not sure what's happening there. Has coronavirus started killing trees?


  8. Saved/Tangled – Wow, I feel so bad for my kids.  What a world…

    BRK.B/Stuart – No, it's just what I feel keeps you protected into the upcoming uncertainty.  If you've had it for years, you could cash out and pick something with more upside potential – that's an alternative too.

    F/Stuart – Well we didn't get our ideal fills and then it really took off so I don't think I'd chase it.  It may come back or there may be something else to trade.

    Lumbar support/Ati – Builders had a strong Q but that's a crazy gain.  Probably WY, etc are lagging if this keeps up.

    Great call though.


  9. Phil / DIS,

    Did you mean to say sell 10 Sept $110 puts instead of 10 of the Sept $110 calls for $3.75 ($3,750)


  10. Phil -LL at a high too from 5. Worth a look?


  11. DIS/Jij – Of course I did!    Thanks.

    LL/Pirate – Lumber is an expense for them so I wouldn't chase it.  Remember when people thought they were going BK?


  12. Phil yes I remember but their earnings last quarter was not too bad and they are not borrowing like they were.  That;s true if they are buying on the secondary market, they have to resell higher. That;s true for RH too. You were always positive on LL and we made profits on them a few times, but your right (as usual) they are toppy as so many others!


  13. ARNA butterfly…cash out.  Nice little gain….


  14. @pharmboy

    Thank you for the arna butterfly — I cashed out a few along the way and the rest this morning at 68 
     

    Never did one of those before 

    I learned They are a little tricky to cash out when the calls are worthless but I figured it out


  15. jeffl – You don't need to close out the worthless calls. I'll let them go when they're under $0.05


  16. daveo

     

    I understand that of course —  but in TOS if I enter an order to close the entire butterfly trade it needs to somehow close out the worthless calls also (which it really can't) so it didn't get filled.  Had to do it piece by piece and then I was getting killed on margin requirements if the short calls were left over


  17. RH/Pirate – Yes but lumber cost is inconsequential for their high mark-ups while LL has far lower margins and more throughput so more affected by short-term price swings (and customers who are more sensitive to price increases).

    ARNA/Pharm – Great call, thanks!

    Just finished the Dividend Portfolio above (refresh).


  18. ARNA…nice jeffl.  So, we now have ARNA Dec 60/70 BCS (from ages ago when we did the July 48/55 BCS) and the Jan 70/75 BCS.  I am slowly buying OTM Jan21 80/90 BCS.  The is latter is a complete gamble on data that will be coming out in December or early January on two different trials. 1. They have an atopic derm trial readout then for etrasimod.  Flip a coin on that one. 2. The big one is for abdominal pain associated with IBD/Crohns with their CB2 drug, olorinab.  Again a coin flip, but IF it hits, they will be at $90 quickly. Pain is a huge market, and this is a nonopioid drug.  Look back at my write up on them here.


  19. LQDA….buying a little more stock here. 


  20. Div portfolio- is that a typo on ET callers? Shows short the 5's while the initial stock purchase was around $8.


  21. Hummm….ACI….maybe sell a few puts in them Phil, whaddya think?


  22. ET/Pstas – Yes, we bought the stock for $11.10 originally and then bought 1,000 more on 3/31 to average $8.13.  We bought back the original 10 short calls at $1.70 for 0.65 (making $1.05 and dropping the basis to $7.11) and then we sold $20 $5 calls for $2, which dropped our basis to $5.11 as we would be happy to get out even and then we just deal with the short puts.


  23. AAPL/Phil I see your AAPL adjustment today, wondering if I should adjust my deep ITM spreads yet (mainly the 25 short '21 $320s and the 20 short '22 $350s, showing big losses)? How do you decide whether to cash out and take a new position rather than rolling up -by how far ITM the longs are and how much is left to gain? And if you roll up, would you wait until most of the premium is expired from the short calls, or is that remaining premium balanced by more premium in the new higher calls you sell?

    AAPL:

    45 '22 $300c             @ $67

    -25 Jun '21 $320c     @$44

    -20 '22 $350c            @$36

    5 '22 $240c               @$49

    -5  Sep $370c           @$22

    -5 '22 $200p             @$21

    THX!


  24. I do see Phil banging on the table about SKT, what are the current positions held in that?


  25. AAPL/Wing -  45 2022 $300 calls are $112 ($504,000) and then you have 25 short June $320s @ $88 ($220,000) and 20 short 2022 $350s @ $81 ($162,000) and then a nice $240/370 spread with short puts.  So better to just treat it like 2 trades and the 5 unit one is fine and you'll roll the short calls one day.  So then it's only about the $225,000 spread that's net $122,000 and it's very well covered and you're going to double your money(ish) if AAPL stays over $350 so what's the problem?  You can just roll the short Junes to the short 2022 $350s now if you want and then maybe sell 10 (1/4) of the short Sept $385s for $22.50 and there's $22,500 in your pocket while you wait for your 100% gain on the longs.

    SKT/Randers – See portfolios above.


  26. Have a great weekend,

    - Phil


  27. Rancor between scientists and Trump allies threatens pandemic response as cases surge



  28. The Fed Is Going To Buy Stocks