End of the Month Summary – August 2017

I pulled out a slight gain in August. The Dow only gained 0.26% and the S&P 500 only edged up 0.05%. I took some risk off as my August options expired and haven’t replaced everything yet. I missed a good opportunity after the short-lived scare from North Korea’s missile launch over Japan and now don’t feel overly bullish enough to take a big risk. I need to sell some out of the money puts at a minimum to keep some cash flow coming in.

My account ended August with a Net Asset Value (NAV) of $103,379.86 according to Interactive Brokers (IB) after finishing July with an NAV of $102,994.78. I had a gain of $385.08 (~0.04%) on paper for August and had $1,020.42 in realized gains from my three closing trades on my WMT, DIS, and QQQ naked puts. I received $52.64 in interest, but no dividends in August since I’m not long shares of anything yet. Quicken reported that I have an account value of $103,327.84, which is the same as what IB says I have after adding in the $52.02 in accrued interest that IB is crediting for me.

I’m 84.88% invested in this account, 40.36 percentage points below the end of July. Much of that change came from the expiration of my four far out of the money naked puts on QQQ that I had essentially ignored since the probability of assignment was so low. I have naked puts on IWM, XLF, MDY, and ADI that are set to expire in a couple of weeks. I’ll probably roll some, if not all, of these options before expiration. As of today, all four are showing a paper profit, but wouldn’t be shocked to see IWM slip some since it’s the smallest profit so far and the contract is still in the money. Since I’m not fully invested, I don’t mind letting these options run a little longer. Worst case, prices drop and I enter into new positions at a lower price with my cash reserves.

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

  • Large-cap ETF: 0.0%
  • Mid-Cap ETFs: 30.95%
  • Small-Cap ETF: 13.74%
  • International: 0.0%
  • Individual Stocks & Other Sector ETFs: 41.59% (pretty much large cap really with ADI, QQQ, AAPL, and XLF included here)
  • 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, August 31, 2017:

  • Dow Jones Return: YTD change +13.01%, 1-year change +22.29%
  • S&P 500 Return: YTD change +11.93%, 1-year change +16.23%
  • NASDAQ Composite Return: YTD change +19.42%, 1-year change +23.31%
  • Russell 2000: YTD change +4.42%, 1-year change +14.91%
  • S&P Midcap 400: YTD change +5.28%, 1-year change +12.37%

These are my returns according to Quicken from February 1, 2017 (when I established new account, albeit with very few trades for a few months, post-separation) through August 31, 2017:

  • YTD Return: +3.44% (not annualized)
  • 1 Year Return: +5.49% (annualized until I have a year of data)

The VIX ended the month at 10.59 and the VXN ended at 14.47. The VIX is 0.33 points higher than at the end of July and the VXN is 1.4 points lower than at the end of July. Both volatility measures finished August below the highs hit in the first half of August – 16.30 for the VIX and 19.07 for the VXN. While I’m not extremely bullish, I’m not extremely bearish either. I need to find a few more options worth selling out of the money, especially on a dip when volatility picks up some.


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