This was a horrid month for my account, again. I’m down a little more than last month and that means it was a bigger percentage loss for me in October too. I’m sitting on huge paper losses as, just like in September, I had a lot of options expire for a profit and have not sold the underlying stocks for the realized losses yet. Get this – I ended October with a realized gain of $9,764.40. For the year to date I have a realized gain of $3,652.09. I’ll be selling something in the next two months to make sure I end the year with a loss for tax purposes and then I’ll have enough to write off for the next few years it looks like too.
According to Quicken, my account balance is $58,809.63. Ameritrade lists me at $58,992.82. That’s down more than $21,000 from last month. Even scarier is that I dipped below $50,000 a couple of times during October. This past week’s rally brought me up nearly $10,000 from my lows. I don’t know if my slide is coming to an end soon, but I like to think I’m in a much better place to move up now than I was a month ago. I have around $5,500 in time value left on my options I’ve sold. This means that if my underlying stocks drop 9% from their current levels again I’ll be able to stay flat. If my underlying stocks stay flat, I’ll be up 9% in three weeks. I’m not even going to entertain the idea that my underlying stocks could actually gain more and hold it.
Commodities had their worst month in 50 years and I was in on too many plays that hinged on their staying up. This is why I’m so far below the indices now, but also why I have more room to gain in the next bear market rally (I’m not even whispering bull market). Eventually I’ll exit these positions and start over with a clean slate, with much less money to work with, but a lot more experience to work with too.
Here’s exactly how I compare the major indexes:
- 12 month Return: -49.25%
- Year to date: -53.91% (not quite double the Dow’s 28.18% loss)
- Annualized Since 4/8/07 (blog’s beginning): -34.29%
- Deposits for month: None
According to Morningstar, here’s how the major indexes have done over the past 12 months:
- 1 year S&P 500 Return: -31.24%
- 1 year Dow Jones Return: -39.81%
- 1 year NASDAQ Return: -39.81%
- 1 year Russell 2000: -34.16%
- 1 year S&P Midcap 400: -36.10%
The VIX ended the month at 59.89 and the VXN ended at 60.30. Historically those are both astronomical levels, so it’s weird to realize they are off their highs. It’s a great time to be selling options, but only if you can figure in which direction the markets could move.
I enjoy your posts. Its refreshing to have someone honestly post his losses. I wish wall street would do the same. I sell a lot of naked puts and calls as well, and that last few months have been tough… I am even for the year but only becasue I was up a lot prior to the slide. A couple of suggestions, consider refining your system, by diciplining your self to buy back your contracts at a target PPS, say when the PPS gets within 2 or 3% of the call or put price. Also consider hedging your naked option by buying an option further out of the money.
best,
zino