I ended October with a combined balance of $115,827.52 ($102,456.69 with Interactive Brokers and $13,370.83 with TD Ameritrade) including the deposit of $2,500 I made in the first half of the month. After ending September with a combined balance of $114,216.93, I lost $1,610.59 on paper for October and had a realized gain for the month of $488.06. That keeps my streak going of having a realized gain each month starting in July 2009. My combined balance in Quicken was close to accurate again as it reported that I have $115,785.36.
I stayed below the major indexes’ returns mainly due to my VXX position which lost another $3,200 on paper. I’m sticking with it though since I think that it will come back up eventually. Its rate of decline has slowed and it even came off its lows from October 25th. I’m planning to get more aggressive this month after I see how the markets handle the news of this week. If we get a good dip I’ll be ready to dive in when I see support surface. If we continue the push higher I’ll add some more exposure every couple of days.
If all of my naked puts were assigned and my covered calls expired worthless I’d be around 137% invested in my IB account. That would put $37,882.77 on margin for me. Of course I don’t expect that to happen or I’d close some positions early, but the risk is there if something unexpected happens. In the event of a major selloff my VXX position would soar and I think my losses would be minimal, if at all.
These are my returns according to Quicken through 10/29/10:
My 1 year return: +6.47%
Year to date (YTD): +0.27%
Annualized returns since 4/8/07 (my blog’s beginning): -8.37%
Deposits for month: $2,500 on October 12th, 2010
According to Morningstar, here’s how I compare to the major indexes through 10/29/10:
Dow Jones Return: 1 year +17.62%, YTD +8.96%
S&P 500 Return: 1 year +16.52%, YTD +7.84%
NASDAQ Composite Return: 1 year +22.61%, YTD +10.50%
Russell 2000: 1 year +26.58%, YTD +13.58%
S&P Midcap 400: 1 year +27.64%, YTD +15.42%
The VIX ended the month at 21.20 and the VXN ended at 22.24. Both are down from last month, but off their October lows. Volatility can certainly fall further, but each tick to the downside feels like the coil is getting push tighter and will cause a bigger explosion to the upside. That won’t happen until the markets have some longer down periods than a few hours.