We need more months like March and I’ll remain a happy man. I’m not getting overly giddy yet though. I still think the markets have some sifting out of data to figure out which direction we’re heading in throughout the rest of the year. I still have a decent percentage of my account in cash right now, especially compared to how I ran my account in 2007 when I would have been more than half on margin if all of my naked puts were assigned. I have $39,153.53 in cash right now and five April NDAQ naked puts that could be assigned to me for $10,000. My six April PCU puts are hedged, but could be assigned to me above my hedge for $10,500 if I don’t just take the loss which I doubt I’ll do in that situation. That leaves me with a potential cash balance of $18,653.53 if PCU and NDAQ move against me and I end up buying the puts’ underlying shares. That’ll give me a 30.7% cash position.
My account balance is $60,624.53 according to TD Ameritrade and is $60,749.33 according to Quicken. That’s up $4,013.95 from my End of February update. My goal I set at the beginning of the year was to make a 30% return for the year. For the sake of making the math easy each month, I take my balance at the end of each month, multiply it by 30% and divide that by 12. With that math, I need to make another $1,515.60 in April. That does not account for the part of compounding interest over a year that should make each month grow a little more each month nor does it account for the time value of money that adds in the dates during the year of when I make deposits, but you get the point still if you’re still reading. I do the few calculations to know how I should trade and to keep me from getting overly aggressive. If my average trade has an underlying value around $10,000 I can make six trades each month and try to get an average of $252.60 on each trade. That seems easy, as long as each trade is a winner -small detail.
Here’s how I compare the major indexes:
- My 12 month Return: -39.94%
- Year to date (YTD): +4.36%
- Annualized return since 4/8/07 (blog’s beginning): -28.98% (next week will be 2 years)
- Deposits for month: No deposits for March 2009
According to Morningstar, here’s how the major indexes have done over the past 12 months and the year to date (YTD):
- Dow Jones Return: – 35.94% 1 year, -12.48% YTD
- NASDAQ Return: -32.93% 1 year, -3.07% YTD
- Russell 2000: -37.50% 1 year, -14.95% YTD
- S&P 500 Return: -38.09% 1 year, -11.01% YTD
- S&P Midcap 400: -36.09% 1 year, -8.66% YTD
The VIX ended the month at 44.14 and the VXN ended at 44.20. Those historically elevated levels of volatility make it easier for me, as an option seller, to make the percentage gains I target without taking on too much risk of over committing.