Month End Summary – March 2018

My account value dropped again in March, but less than the major indexes. The gains I took on a few of my options, ADI, IWM, TLT, and GS helped cut my losses as did my far out of the money position on NFLX, but I had some painful positions in WMT and XLB that continue to cause pain. I only have April options on AAPL and NFLX. My NFLX naked put was still more than $60 out of the money at the end of March. My AAPL naked put was only $3 out of the money. Both stocks are still out of the money late in the day as I write this, even after the sizeable declines in stock prices across the board today.

My account ended March with a Net Asset Value (NAV) of $100,094.66 according to Interactive Brokers (IB) after ending February with an NAV of $100,922.05. I had a loss of $827.39 (~0.82%) on paper for March (compared to the Dow’s 3.47% decline and the S&P 500’s 2.64% decline) and had $1,214.09 in realized gains from my seven closing trades on my ADI, GS, IWM, WMT, and XLB naked puts in addition to my short TLT call spread. However, I did not include the profit from the WMT and XLB puts yet since they were assigned. Instead, I rolled those profits into the cost of the stocks to lower their price. When I exit WMT and XLB (likely for a loss), the original put premiums I received will show up there. For example, my WMT put’s premium was $419.32 when I sold it. That means my cost per share is roughly $100.81. Not including covered call premiums, if I sold WMT for $90, I’d have a loss from the series of trades of $1,000.81 (($100.81-$90) x 100 shares).

I received $38.48 in interest ($34.02 less than last month), but no dividends in March since I wasn’t long shares of anything. Quicken reported that I have an account value of $100,094.29, which is a penny less than what IB says I have with the $54.36 in accrued interest that IB is crediting for me. I didn’t bother to figure out where the rounding error is. I’m going to see if it corrects itself over the next few months when the positions close.

I’m 108.84% invested in this account, 5.48 percentage points above the end of February. I didn’t make too many changes in March. Aside from rolling my GS and IWM naked puts at the same strike from March to May, I closed out my ADI naked put and replaced it with a FB naked put. My WMT and XLB puts were assigned, but I’ve only sold a covered call on WMT so far. With roughly $1,800 in time value remaining, I have a little cushion heading into the spring, but not as much as I’d like based on the increased volatility that’s hitting the markets.

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

– Large-cap ETF: 0.0%
– Mid-Cap ETFs: 0.0%
– Small-Cap ETF: 15.88%
– International: 0.0%
– Individual Stocks & Other Sector ETFs: 97.00% (pretty much large cap really with AAPL, FB, 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 March’s last trading day, March 29, 2018:

– Dow Jones: YTD change -1.96%, 12-month change +19.39%
– S&P 500: YTD change -0.76%, 12-month change +13.99%
– NASDAQ Composite: YTD change +2.33%, 12-month change +19.50%
– Russell 2000: YTD change -0.08%, 12-month change +11.79%
– S&P Midcap 400: YTD change -0.77%, 12-month change +10.97%

These are my returns according to Quicken (I only made a few trades for the few months leading up to my divorce in June 2017) through the end of March 2018:

– YTD Return: +0.09% (not annualized)
– 1 Year Return: +6.16%

The VIX ended the month at 19.97 and the VXN ended at 26.68. The VIX finished March 0.12 points higher than the end of February. The VXN finished 4.67 points higher. The VIX made it as high as 26.01 on March 23 and the VIX peaked at 29.01 on March 28. Both volatility indexes are up significantly on the first day of trading in the second quarter. Now that volatility has pushed higher, traders have to figure out if the downside risk is worth the improved premiums. Especially at times like this, I like the idea of only selling puts with limit orders that are well above the ask price when you place the order in the hopes that a random daily price dip will trigger the trade.



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