Month End Summary – January 2018

It feels good to be back in the swing of things and making more trades than I did in most months last year. One drawback to selling options is that you don’t get the big upswings in your account balance when the markets make big moves higher. This lag can be discouraging for those who are new to selling options, but the benefit is that you don’t get the quick account balance drops when the markets drop. The peaks and valleys are smoothed out essentially. While I did have a positive month in January, I was hampered by this lag and the fact that I made more of my trades in the second half of the month and missed out on some gains.

My account ended January with a Net Asset Value (NAV) of $101,128.79 according to Interactive Brokers (IB) after beginning the month with an NAV of $100,000.00 after I withdrew $7,211.56 on January 3. I had a gain of $1,128.79 (~1.13%) on paper for January and had $1,299.86 in realized gains from my three closing trades on my IWM, NFLX, and QQQ naked puts. I received $67.51 in interest ($14.84 more than last month), but no dividends in January since I wasn’t long shares of anything. Quicken reported that I have an account value of $101,058.46, which is the same as what IB says I have with the $70.33 in accrued interest that IB is crediting for me.

It’d be nice to have $1,300 per month in realized gains in this account, so I could end the year with more than $15,000 in gains. That goal might be hard considering I only have one option scheduled to expire in February. I have over $2,200 possible in March, so the average could work out, but a lot can happen over the next six weeks before March expiration.

I’m 101.49% invested in this account, 30.08 percentage points above the end of January. I don’t think I was over 100% invested at the end of any month last year, so it shows I’m in the game more now. My NFLX March $205 naked put is so far out of the money that it could be misleading to say I’m that heavily invested. I’m also not factoring in my two TLT combinations, but they are small enough that it wouldn’t really make a difference. Most of my positions have a paper profit right now, but my options on AAPL, IWM, and XLB need to see time value (theta) erode more to bring me into a paper (or realized) profit. XLB could end up with a loss if today’s 1.45% intraday drop is an indication of a true change in sentiment. I might wait at least another week before making another trade unless something jumps out at me that I can’t wait on. I don’t want to get so overextended that I have no dry powder available for trades when we get more than 2% correction.

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

– Large-cap ETF: 0.0%
– Mid-Cap ETFs: 0.0%
– Small-Cap ETF: 15.72%
– International: 0.0%
– Individual Stocks & Other Sector ETFs: 87.81% (pretty much large cap really with AAPL, ADI, GS, NFLX, and WMT 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 January’s last trading day, January 31, 2018:

– Dow Jones: YTD change +5.88%, 12-month change 34.80%
– S&P 500: YTD change +5.73%, 12-month change 26.41%
– NASDAQ Composite: YTD change +7.36%, 12-month change 32.00%
– Russell 2000: YTD change +2.61%, 12-month change 17.18%
– S&P Midcap 400: YTD change +2.87%, 12-month change 17.61%

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 leading up to my divorce in June 2017) through January 31, 2018:

– YTD Return: +1.13% (not annualized)
– 1 Year Return: +7.83%

The VIX ended the month at 13.54 and the VXN ended at 19.60. The VIX is 2.50 points higher than at the end of December and the VXN is 3.92 points higher than the end of December. The VIX topped out at 15.42 on January 30. The VXN made it as high as 20.71 on the same day. Both volatility indexes finished close to their highs for the month. It’d be nice to find out that January’s uptick in volatility was the beginning for a bigger trend and we’ll have richer option premiums in the coming months.


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DISCLAIMER: While I am a Registered Investment Advisor Representative, the information contained within this site does not constitue personalized investment advice. This material is meant as entertainment and is only a view into how I invest my own account, but not necessarily how you should invest your own funds. Trade using your own research at your own risk. This is impersonal investment advice which means the material written here, in email exchanges, on Twitter and/or other social networking sites do not purport to meet the objectives or needs of specific individuals or accounts.

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