End of the Month Summary – February 2017

The good news from February was that my new account is officially funded. The bad news is that I didn’t invest enough yet while the market continued to melt higher. I gained some, but not much at all. While my account is funded, I still feel like I should be very cautious until my divorce is final. It’s really more than the divorce that’s holding me back. I think we are due for a correction of at least 5%, but would love to see 10%. Unless something big happens, such as China shows bad economic news and/or Greece or another country starts its own EU exit process or debt restructuring, I don’t expect a decline that will last more than a couple of months. My outlook is based on the valuation of the S&P 500 and how steady this climb has been. Eventually we’ll revert to the mean and come closer to the 50 and 200-day moving averages. Still, I have too much on the sidelines even for that outlook.

I ended February with a Net Liquidation Value (NLV) of $100,200.02 and a Net Asset Value (NAV) of $100,202.80 according to Interactive Brokers (IB) after starting this account with $100,000.00 on February 2. After one month, I have a gain of $200.02 (~0.2%) on paper for February and a realized gain of $0 since I had no closing trades. I received no in dividends in February. Quicken reported that I have an account value of $194.40, which is the same as what IB says I have after adding in the $8.40 in accrued interest that IB is crediting me for.

I closed out my old account and had a realized gain of $43.27 from my DIS position that included buying at $115 and selling at $110 along with an assigned put and an assigned covered call that reversed my losses and added a few bucks. DIS is a few cents below where it closed at options expiration, so I might sell a new naked put soon again.

I am 27.26% invested in this account. As I mentioned above, I have some work to do, but the market is moving like it could have a little more upside and then a better entry point soon. That said, I can’t just stay on the sideline without some risk to try for some reasonable gains.

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

  • Large-cap ETF: 0.0%
  • Mid-Cap ETFs: 27.45% (includes long put that cuts risk)
  • Small-Cap ETF: 13.47%
  • International: 0.0%
  • Individual Stocks & Other Sector ETFs: 0.0%
  • Bonds: 0.0%
  • 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, February 28, 2017:

  • Dow Jones Return: YTD change +5.82%, 1-year change +29.33%
  • S&P 500 Return: YTD change +5.94%, 1-year change +24.98%
  • NASDAQ Composite Return: YTD change +8.22%, 1-year change +27.81%
  • Russell 2000: YTD change +2.33%, 1-year change +36.11%
  • S&P Midcap 400: YTD change +4.34%, 1-year change +31.73%

These are my returns according to Quicken through February 28, 2016:

  • YTD Return: +0.21%
  • 1 Year Return: +2.56% (annualized until I have a year of data)

The VIX ended the month at 12.92 and the VXN ended at 13.60. The VIX is 0.93 points higher than at the end of January and the VXN is 0.69 points lower than at the end of January.  Both volatility measures finished February at their highs. Volatility is still on the low side of the historical average, which doesn’t help those of us who like to sell options as a source of income or growth.

The CBOE SKEW Index finished February at 131.98, 6.10 points lower than the end of January. The SKEW rose to a monthly high of 141.41 on February 16, as traders briefly flinched right before options expiration. That was up from the low of 129.19 on February 9. Nerves are calming for now, but don’t expect it to last all year.


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