End of the Month Summary – August 2016

(Sorry for the delay on this post. I wrote it on 9/1, but apparently forgot to hit “Publish”.)

It is a lot more fun to make money than to lose money, but I assume y’all knew that already. I was due for a good month in my account again and August delivered. TLT, IWM, and MDY all gained ground for me, while DIS cost me another $149.00. I had to pay my monthly medicine in the form of dividends and interest for my short TLT position, but I gained $1,861.41 on the TLT price drop, so it worked out for me.

I ended August with a Net Liquidation Value (NLV) of $77,777.76 and a Net Asset Value (NAV) of $77,780.47 according to Interactive Brokers (IB) after finishing July with an NLV of $75,272.47. The difference in month end values gave me a gain of $2,505.29 (~3.22%) on paper for August and a realized gain of $507.90 on two closing trades. I received no dividends and paid $415.98 in short interest and dividends for my short TLT shares. The net total was a realized profit of $91.92 in August. Quicken reported that I have an account value of $77,839.00, the same as IB’s reported NAV after accounting for interest and dividend accruals of -$58.53. To get the Quicken and IB reports to match, I had to deduct $0.02 from my Quicken records since it was still off from the past couple of months.

IWM is slightly up from the end of July. MDY is essentially flat. DIS is down some. Once again, I should’ve sold covered calls, but didn’t. I might tomorrow. I was thinking of selling calls today when it looked like stocks were starting to rollover, but they’ve recovered some. So, I’ll probably give it another day, if not another month.

If all of my naked puts were assigned, I would be 79.02% invested in this account. I am invested 2.98 percentage points less than I was at the end of July thanks to my account balance increase. This doesn’t completely represent my exposure because my TLT position skews my total risk. I have a little more improvement from my risk of a margin call now compared to the past couple of months, but don’t see me adding anything new outside of maybe a FEZ naked put or two.

This is my asset allocation in my IB account as of the end of August:

  • Large-cap ETF: 0.0%
  • Mid-Cap ETFs: 36.65%
  • Small-Cap ETF: 31.69%
  • International: 0.0%
  • Individual Stocks & Other Sector ETFs: 12.14%
  • Bonds: -233.78% (not including my TLT options, just the short shares)
  • Short ETFs: 0.0%

According to Morningstar, here’s how I compare to the major indexes (including dividends) through the month’s last trading day, August 31, 2016:

  • Dow Jones Return: YTD change +7.65%, 1-year change +14.37%
  • S&P 500 Return: YTD change +7.82%, 1-year change +12.55%
  • NASDAQ Composite Return: YTD change +4.11%, 1-year change +9.14%
  • Russell 2000: YTD change +10.23%, 1-year change +8.59%
  • S&P Midcap 400: YTD change +13.12%, 1-year change +12.33%

These are my returns according to Quicken through August 31, 2016:

  • YTD Return: -20.05%
  • 1 Year Return: -11.01%
  • Average Annual (not cumulative) Return since November 18, 2009 (when I opened my IB account): +6.64%

The VIX ended the month at 13.42 and the VXN ended at 15.34. The VIX is 1.55 points higher than at the end of August and the VXN is 1.37 points lower than at the end of August. Both volatility measures ended the month at their highs and have continued the push higher today.

The CBOE SKEW Index finished August at 129.25, 1.00 point higher than the end of July. This reading is in no-man’s land and doesn’t give a strong directional forecast for either direction. It finished the month close to its lows from its mid-month peak of 136.71 on August 17.

 



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