If only every month could be as easy and as profitable as January was. While I haven’t come close to making up for my losses in 2018, I made a good step in the right direction. I would’ve done even better if I didn’t have the covered call on half my AAPL shares that finished the month in the money. The same is also true for the covered call on my 100 ADI shares that’s deep in the money now.
While I could’ve made more in January, I’m trying to stay true to my plan of exiting some of my individual stocks and return to my simple strategy of selling index ETF covered calls and naked puts. My realized losses last year on GS and FB reminded me of the risks of trying to pick winners and losers on an individual basis versus the much easier route of simply trying to beat the indexes by investing with options and managing risk for my age and goals.
My account ended January with a Net Asset Value (NAV) of $87,697 according to Interactive Brokers (IB) after ending December with a NAV of $83,609.34. I had a gain of $4,087.66 (~4.89{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}) on paper for January (better than the Dow’s 7.17{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} gain and the S&P 500’s 7.87{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} in January. I had $767.94 in net realized gains from my two closing trades (AAPL and ADI covered calls). I received no dividend or interest payments in January. Quicken reported that I have an account value of $87,686.56, which is the same as what IB shows after I add in the $10.44 in interest accruals.
I’m 78.99{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} invested in this account, 6.99 percentage points above the end of December. This $18,423.90 I have in uninvested cash helps to explain why I trailed the large cap indexes. I only have one option remaining that expire in February, my one XLB February $52 covered call that’s already in the money by $1.35. It has ~$.35 in time value left, so I’ll probably let it get called away instead of trying to get out early. If I didn’t have such a high percentage of my account in cash already, I would probably roll it early, but I don’t need to free up the cash before the option expires in two weeks.
I’ve been thinking about adding in $10,000 to this account when I climb back up to $90,000, but I found out today that I might need surgery on the two herniated discs in my lower back. I have terrible insurance and think I’ll be coming out of pocket for a huge chunk of it, so I might need to keep extra cash handy. For now, I’m not scheduling surgery and I’m not at $90,000, so I don’t have a decision to make yet.
This is my asset allocation in my IB account as of the end of January:
– Large-cap ETF: 0.0{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– Mid-Cap ETFs: 0.0{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– Small-Cap ETF: 16.94{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– International: 4.00{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– Individual Stocks & Other Sector ETFs: 55.37{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} (most of this is large cap really with 200 AAPL shares and 100 ADI shares included here)
– Bonds: 0.0{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– Short ETFs: 0.0{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
According to Morningstar, here’s how I compare to the major indexes (including dividends) through the last trading day, January 31, 2019:
– Dow Jones: YTD change +7.29{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, 12-month change -2.19{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– S&P 500: YTD change +8.01{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, 12-month change -2.31{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– NASDAQ Composite: YTD change +9.74{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, 12-month change -1.75{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
– Russell 2000: YTD change +11.25{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, 12-month change -3.52{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}<
– S&P Midcap 400: YTD change +10.46{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}, 12-month change -4.53{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
My return according to Quicken through the January 31, 2019:
– YTD Return: +5.33{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6} (not annualized)
– 1 Year Return: -13.77{01de1f41f0433b1b992b12aafb3b1fe281a5c9ee7cd5232385403e933e277ce6}
The VIX ended the month at 16.57 and the VXN ended at 20.24. The VIX finished January 8.85 points lower than the end of December. The VXN finished 11.2 points lower. The VIX peaked on January 3, when it hit an intraday high of 26.60. The VXN peaked the same day at 32.94.
SOURCE: My Trader’s Journal – Read entire story here.
