Month End Summary – May 2008

May 2008 was another good month for me.  As I wrote after May’s options expiration, almost all of my options expired worthless giving me full profit and I reached my investing milestone early.  I moved back to a positive 12 month return, once again better than all major indices.

My current account value according to Quicken is $94,669.39 and according to TD Ameritrade is $94,478.58.  I’m actually allowing myself to dream of hitting $100k by my July birthday.  Here’s how the month ended and I compare the major indices:

• 12 month Return: +2.05%
• Annualized Since 4/8/07 (blog’s beginning): +6.70%
• Deposits for month: $4,000 on 5/1/08

According to Morningstar, here’s how the major indices have done over the past 12 months:

• 1 year S&P Return: -6.70%
• 1 year Dow Jones Return: -5.03%
• 1 year NASDAQ Return: -3.14%
• 1 year Russell 2000: -10.53%
• 1 year S&P Midcap 400:  -2.50%

Market volatility has been scaring me a little lately for my naked puts.  With the VIX and VXN so low now, premiums aren’t as good as they were during the past 6+ months and the chance of a run back up to the 30+ range has been making me second guess selling too many new options since a spike in the VIX/VXN can increase option prices, even with time decay and stable prices.  This is where the VIX and VXN closed for May 2008:

• CBOE Market Volatility Index (^VIX): 17.83
• Nasdaq Volatility Index (^VXN): 20.85

I went back to my notes from the end of January 2007 and saw that what I’m considering as low now pales in comparison to how low it was in January 2007.  That gives me a sigh of relief and an increased desire to wade a little deeper into these potentially dangerous waters, but I still feel the pressures of high oil/gas will eventually weigh heavy on consumers and this market again and we’ll hit another dip.  This is where the VIX and VXN closed for January 2007:

• CBOE Market Volatility Index (^VIX): 10.42
• Nasdaq Volatility Index (^VXN): 17.19

My wife came through our office as I was writing this post and it was fun to brag to her and show “our” returns, especially since I went silent during my January debacle while raking in some big losses.